Archive for January 21st, 2020

RBI releases Board Minutes

January 21, 2020

After a long wait and requests, RBI has begun to release its Board Minutes:

The Reserve Bank of India (RBI) has been, over the years, taking steps to enhance transparency with regard to its functioning. The minutes of the meetings of the RBI’s Central Board of Directors (Central Board) have evinced considerable public interest and some of these have been shared with persons who sought them under the Right to Information Act 2005 (RTI Act). As a measure of further enhancing public awareness about the functioning of the RBI, it has been decided to place the minutes of the meetings of the Central Board on the RBI’s website in terms of provisions of Section 4 of the RTI Act, after appropriately severing information that is permitted to be severed as per the Act. Accordingly, the minutes of the meeting of Central Board held in Chandigarh on October 11, 2019 have been released today. In future, the minutes will be placed on the RBI website within two weeks from the date of its confirmation in the next meeting of the Central Board and on being signed by the chairman in the same meeting.

Scanning the Board Minutes does not give much details though. But it is a good start as you know what points were covered.

The Green Swan: Central banking and financial stability in the age of climate change

January 21, 2020

Kudos to BIS for bringing a report with such an innovative title. Taleb made his point about financial risks via his boo titled Black Swan and BIS is doing the same highlighting climate risks with the title Green swan!

The report is written by 4 scholars – Patrick Bolton, Morgan Després, Luiz Awazu Pereira da Silva, Frédéric Samama and Romain Svartzman:

Climate change poses new challenges to central banks, regulators and supervisors. This book reviews ways of addressing these new risks within central banks’ financial stability mandate. However, integrating climate-related risk analysis into financial stability monitoring is particularly challenging because of the radical uncertainty associated with a physical, social and economic phenomenon that is constantly changing and involves complex dynamics and chain reactions. Traditional backward-looking risk assessments and existing climate-economic models cannot anticipate accurately enough the form that climate-related risks will take. These include what we call “green swan” risks: potentially extremely financially disruptive events that could be behind the next systemic financial crisis.

Central banks have a role to play in avoiding such an outcome, including by seeking to improve their understanding of climate-related risks through the development of forward-looking scenario-based analysis. But central banks alone cannot mitigate climate change. This complex collective action problem requires coordinating actions among many players including governments, the private sector, civil society and the international community. Central banks can therefore have an additional role to play in helping coordinate the measures to fight climate change. Those include climate mitigation policies such as carbon pricing, the integration of sustainability into financial practices and accounting frameworks, the search for appropriate policy mixes, and the development of new financial mechanisms at the international level. All these actions will be complex to coordinate and could have significant redistributive consequences that should be adequately handled, yet they are essential to preserve long-term financial (and price) stability in the age of climate change.

Looks like a really comprehensive assessment of things..

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