Climate Changed
Fed Researcher Warns Climate Change Could Spur Financial Crisis
- Regional Fed paper says carbon tax could address the threat
- The Fed doesn’t have tools to confront the crisis, paper says
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Climate change is becoming increasingly relevant to central bankers because losses from natural disasters that are magnified by higher temperatures and elevated sea levels could spark a financial crisis, a Federal Reserve Bank of San Francisco researcher found.
“Climate-related financial risks could affect the economy through elevated credit spreads, greater precautionary saving, and, in the extreme, a financial crisis,’’ Glenn Rudebusch, the San Francisco Fed’s executive vice president for research, wrote in a paper published Monday.