ECB Sounds Alarm on Climate-Related Economic Risks
The European Central Bank is sounding the alarm about the growing risks of climate change to the global economy and financial stability. According to Frank Elderson, a member of the ECB's Executive Board, the degradation of natural ecosystems poses significant economic and financial consequences.
Elderson notes that the destruction of ecosystem services, including water resources, soil fertility, pollination, biodiversity, and other natural systems, can affect credit risks, economic growth rates, and inflation. In the long term, this could undermine financial stability.
The ECB is preparing a study to show how the deterioration of ecosystems could translate into credit losses for eurozone banks, scheduled to be released by the end of the year. Elderson emphasizes that the increase in natural disasters due to global warming only underscores the relevance of these risks.