MAS is working toward incorporating a broader range of climate change-related risks in thematic scenarios as part of a future industry-wide stress test. This was announced, by Ong Ye Kung who is a minister in Singapore, in response to a Parliamentary Question on the plans of MAS for including climate change-related risks in the annual industry-wide stress test. MAS is also a founding member of the global Network for Greening the Financial System, which develops best practices for a more sustainable financial industry. Locally, MAS will be issuing a consultation paper on Environmental Risk Management guidelines for various financial institutions in the first quarter of this year.
MAS has already started to stress test for risks related to climate change. However, the methodologies for stress testing climate change-related risk are still at a nascent stage. BoE, as mentioned by an MP Mr. Louis Ng Kok Kwang, has acknowledged that central banks and the financial sector are still building capacity to model financial risks arising from climate change. IMF too is working to improve its climate change-related stress scenarios. MAS takes climate change-related risks seriously as a financial supervisor. Financial institutions are potentially exposed to such risks because they provide financing and insurance services to businesses that can be impacted by a wide range of climate change-related events, including natural catastrophes. There are also risks arising from changes to public policies, technologies, or consumer preferences that can impact businesses significantly. Climate change is, therefore, increasingly relevant to financial institutions, both because the risks will be on their balance sheets and because they will play a role in enabling their customers and the economy at large to make a transition in Singapore as well as abroad.
Keywords: Asia Pacific, Singapore, Banking, Insurance, Climate Change Risk, Stress Testing, NGFS, ESG, MAS
Previous ArticleEBA Updates List of Validation Rules and Taxonomy for Reporting
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).