Featured Product

    NGFS Publishes First Set of Scenarios for Climate Risk Assessment

    June 24, 2020

    The Network for Greening the Financial System (NGFS) published a first set of climate scenarios for forward-looking climate risk assessment, along with a user guide. The scenarios have been developed to provide a common starting point for analyzing climate risks, while the guide provides practical advice on using scenario analysis to assess the climate risks to the economy and financial system. NGFS also published two reports: one report presents research priorities with respect to the analysis of the macroeconomic and financial stability impact of climate change while the other report examines the possible effects of climate change on monetary policy. Additionally, NGFS announced that the Asian Development Bank joined the NGFS as an observer in June 2020.

    The NGFS scenarios explore the transition and physical impacts of climate change under varying assumptions, with the aim to provide a common reference framework for central banks and supervisors to understand these future risks. This first iteration of the scenarios explores climate and policy pathways that are consistent with the NGFS framework that was published in the first NGFS comprehensive report in April 2019. The scenarios were chosen to show a range of low and high risk outcomes. A key guiding principle of the project has been embracing the uncertainty inherent in scenario modeling. This has been captured in two ways. First, five alternate scenarios have been published to help users explore how specifying different key assumptions would change the results. Second, for each scenario, multiple models have been used to provide a range of estimates. While developed primarily for use by central banks and supervisors, these scenarios may also be useful to broader financial, academic, and corporate communities. The NGFS climate scenarios were selected in partnership with an academic consortium, including the Potsdam Institute for Climate Impact Research (PIK), the International Institute for Applied Systems Analysis (IIASA), the Center for Global Sustainability at the University of Maryland (UMD), and Climate Analytics.

    The NGFS will continue to develop the scenarios to make them more comprehensive, with the aim to be as relevant as possible for economic and financial analyses. In addition, NGFS will continue to work with a consortium of academic partners to refine and expand the scope of the scenarios. Areas of focus will include expanding the scenario modeling to explore further dimensions of the risks, improving regional coverage and sectoral granularity, calculating probabilistic losses from acute climate impact, expanding the set of macroeconomic outputs, and improving the NGFS scenario database and portal. The guide to climate scenario analysis for central banks and supervisors provides practical advice on using scenario analysis to assess climate risks to the economy and the financial system. It is based on the initial experiences of NGFS members and observers and aims to advance the discussion on the methodologies used.

     

    Keywords: International, Banking, Insurance, Securities, Climate Change Risk, Stress Testing, Physical Risk, Transition Risk, ESG, NGFS

    Featured Experts
    Related Articles
    News

    PRA and FPC Finalize Changes to Leverage Ratio Framework in UK

    The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA

    October 08, 2021 WebPage Regulatory News
    News

    CFPB Proposes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.

    October 08, 2021 WebPage Regulatory News
    News

    PRA Decides to Maintain O-SII Buffers for Another Year

    The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.

    October 08, 2021 WebPage Regulatory News
    News

    FSB Report Assesses Implementation of Recommendations on Stablecoins

    The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.

    October 07, 2021 WebPage Regulatory News
    News

    APRA Updates Loan Serviceability Expectations for Home Lending

    In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

    October 06, 2021 WebPage Regulatory News
    News

    CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.

    October 06, 2021 WebPage Regulatory News
    News

    EBA and EIOPA Set Out Work Priorities for 2022

    The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.

    October 05, 2021 WebPage Regulatory News
    News

    MFSA Issues Reporting Updates and Guidance for Banks

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.

    October 05, 2021 WebPage Regulatory News
    News

    EC Publishes Decision on List of Equivalent Third Countries Under CRR

    The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).

    October 04, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write-Down and Conversion Powers

    EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.

    October 04, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7552