ECB Warns Climate Crisis Threatens Global Financial Stability
Frank Elderson, a member of the European Central Bank's executive board, warned that the climate crisis poses a growing threat to global financial stability. The breakdown of nature and ecosystem services is rapidly declining, with rising frequency of natural disasters linked to global heating.
Elderson emphasized that reliance on nature is more complicated to map than the impact of a single extreme weather event, making it essential to assess the risk from the collapse of ecosystem services.
The ECB has launched a programme of work to investigate how 'ecosystem degradation pathways' could translate into credit loss dynamics for eurozone banks. This analysis will be published later this year and aims to provide a clearer understanding of the financial risks associated with climate-related disasters.