Central Bank Digital Currencies to Be Explored by Bank of England

Andrew Cummings
January 22, 2020

The BIS in September created a new fund to make it easier for central banks to invest in green bonds.

A new report from an worldwide banking organization (stay with me) suggests that climate change could trigger the next major economic crisis in the world, and warns that the planet's response to rising temperatures could "have catastrophic and irreversible effects that could be quantified would make financial damage impossible".

Last year BoE Governor Mark Carney took aim at the US dollar's "destabilizing" role in the world economy and said central banks might need to join together to create their own replacement reserve currency.

The paper cites several aspects that make climate events distinct from "black swan" events, in particular, that there is a clearly established need to act, and an opportunity to avoid, or limit, the extent of the catastrophe.

The BIS said this could be the template used in the case of climate change.

"These include what we call "green swan" risks: potentially extremely financially disruptive events that could be behind the next systemic financial crisis".

The European Central Bank has also been investigating the possible benefits of CBDC since a year ago.

THE Reserve Bank has been urged to "mobilise all forces" to save the economy from a disaster induced by climate change.

"In the world of central bankers, the idea of using CBDCs to enhance the effect of monetary policy seems to have subsided somewhat", he said.

"Central banks can not (and should not) simply replace governments and private actors to make up for their insufficient action, despite growing social pressures to do so".

"Climate change poses unprecedented challenges to human societies, and our community of central banks and supervisors can not consider itself immune to the risks", Villeroy de Galhau said.

The analysis reiterates often-made arguments that central banks alone can't provide the needed solutions, but also acknowledges that climate change may lead such institutions into uncharted waters where traditional models will tell them little about the scope of the crisis at hand and careful decisions must be taken on how to engage. "Businesses need to take account of both the physical risks and the transition risks".

It comes as four of Australia's leading global aid organisations have urged the Morrison Government to take major climate change action amid the country's bushfire crisis.

Frydenberg said about the bushfires that "the full economic impact is still uncertain", and that the government would prioritise providing financial support to impacted communities over the need to deliver a surplus when the next federal budget is handed down in May.

"Australians are suffering through the devastating ongoing fallout from our worst fire season on record, with dozens of lives, thousands of homes and more than a billion creatures lost".

Other reports by iNewsToday