Climate-related financial risks and the central bank
In recent years, there has been a growing consensus within the central banking community about the importance of addressing the risks that climate change poses to our economies. In the setting of a long-term internship at the Banque de France in 2020, I worked on the question of factoring in climate-related risks in the collateral framework of the Eurosystem. This internship was a great experience to deepen my knowledge in monetary policy and climate economics. More precisely, I studied the so-called "2°C alignment" methodologies developed by several actors of the financial industry, which aim to analyze a financial portfolio in light of low-carbon transition scenarios. Together with colleagues from the Banque de France, we published a working paper entitled "Climate-related Risks and Central Banks' Collateral Policy: a Methodological Experiment", which applies "2°C alignment" tools to the pools of collateral. A blog post in the Banque de France's Eco Notepad provides a summary of the working paper.
