Beyond monetary policy, central banks act as regulators. Practice now includes . Unlike traditional stress tests that look at a 12-month horizon, climate tests look 30 years into the future. They force commercial banks to model how their portfolios would survive various "orderly" and "disorderly" transition scenarios. 4. The Debate: Independence and "Mission Creep"
The risk that sudden policy shifts or technological breakthroughs will lead to "stranded assets"—investments in fossil fuels that lose value overnight. 2. Practice: Greening the Monetary Policy Toolkit Central Banking: Theory and Practice in Sustain...
Central Banking: Theory and Practice in the Era of Sustainability Beyond monetary policy, central banks act as regulators