Kopi Time E20: ECB's Paul Hiebert on the intersection of financial stability and climate risk

“What can be measured, can be managed”   Paul Hiebert, Head of Systemic Risk & Financial Institutions Division at the European Central Bank, joins Kopi time to talk about climate change and financial risks. He goes over the key initiatives undertaken by various Euro area institutions to produce and disseminate better data, standards, and analysis so that private and public sector can prepare for the impending high cost of dealing with climate change. Paul shares estimates of relevant long-term potential loss in GDP and the annual cost of remedial measures that are now being used for planning and regulation purposes. He then goes over key initiatives by regulators and governments to estimate climate change related credit risk on the balance sheet of the financial sector, work in progress to build the capacity to price such risks, and simulation and scenario analysis to quantify the need for further investment. Paul also sheds light on initiatives beyond the Euro Area, such as by the Network for Greening the Financial System, the Financial Stability Board, and the Basel Committee on Banking Supervision.