Janet Yellen – “Climate crisis threatens US financial stability”

Janet Yellen, secretary of the U.S. Treasury Department, warns of the consequences of global warming following a special FSOC report. Heavy industries, asset value and the weaker classes will be harmed

The Financial Stability Board (FSOC) in the U.S. Treasury Department last week released a first-of-its-kind report stating that continued global warming is expected to lead to an increase in the frequency and intensity of natural disasters, including hurricanes, fires and floods. The result of all this, according to the report, is damage to property, loss of income, damage to the value of assets and disruption of economic activity.

The Financial Stability Board (FSOC) in the U.S. Treasury Department last week released a first-of-its-kind report stating that continued global warming is expected to lead to an increase in the frequency and intensity of natural disasters, including hurricanes, fires and floods. The result of all this, according to the report, is damage to property, loss of income, damage to the value of assets and disruption of economic activity.

At the same time, the report states that preparations should be made for a shift from fossil fuels to renewable energies that could lead to a sharp drop in the shares of fossil fuel companies, as well as companies from dependent sectors, such as automotive or heavy industry. Others of the financial system. “The financial sector may suffer from credit risks and markets related to loss of income, non-repayment of loans and changes in the value of assets,” it said.

The report further warns that the negative effects of the climate crisis will be more severe among financially vulnerable communities, including low-income and minority. “These communities also have fewer resources to recover or adapt to adverse effects,” the report said. “Certain actions are needed to address climate-related financial risks that could affect vulnerable communities in the form of higher insurance premiums and interest rates, or an inability to purchase insurance or obtain loans.”

The FSOC recommends, among other things, establishing a Financial Risk Examination Board in the field, conducting a more rigorous analysis of the effects of the climate crisis on the insurance industry and increasing coordination with experts and scientists in the field to better understand its economic and financial impacts. “The report and the FSOC recommendations represent an important step on the way to making our financial system more robust to the threat of climate change,” Treasury Secretary Janet Yellen said in a press release upon submission of the report. “The measures will support the administration’s urgent policy on the climate crisis and will help the financial system make an orderly transition to the target of emitting zero emissions.”

By Editor

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