Financial Regulation, Climate Change, and the Transition to a Low-Carbon Economy: A Survey of the Issues

Author/Editor:

Dimitri G Demekas ; Pierpaolo Grippa

Publication Date:

December 17, 2021

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

There are demands on central banks and financial regulators to take on new responsibilities for supporting the transition to a low-carbon economy. Regulators can indeed facilitate the reorientation of financial flows necessary for the transition. But their powers should not be overestimated. Their diagnostic and policy toolkits are still in their infancy. They cannot (and should not) expand their mandate unilaterally. Taking on these new responsibilities can also have potential pitfalls and unintended consequences. Ultimately, financial regulators cannot deliver a low-carbon economy by themselves and should not risk being caught again in the role of ‘the only game in town.’

Series:

Working Paper No. 2021/296

Frequency:

regular

English

Publication Date:

December 17, 2021

ISBN/ISSN:

9781616356521/1018-5941

Stock No:

WPIEA2021296

Pages:

45

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