Climate change does not pose serious risk to US financial stability: Fed governor

By Ovunc Kutlu

ISTANBUL (AA) - US Federal Reserve Governor Christopher Waller said on Thursday that he does not believe climate change poses a serious risk to the safety and soundness of large banks or the financial stability of the United States.

During his speech at IE University in Madrid, Spain, Waller emphasized that he does not see a need for special treatment for climate-related risks in financial stability monitoring and policies.

"Based on what I've seen so far, I believe that placing an outsized focus on climate-related risks is not needed, and the Federal Reserve should focus on more near-term and material risks in keeping with our mandate," he added.

The Fed governor, in addition, said there have always been concerns about new technology developments that are associated with climate change, which will be "disorderly," but added "Much technology development is disorderly."

He emphasized that the coronavirus pandemic, rising geopolitical risks and other stresses, such as the US banking sector crisis in recent months, have "highlighted the important role" central banks have amid financial stability risks.

"The Federal Reserve's goal in financial stability is to help ensure that financial institutions and financial markets remain able to provide critical services to households and businesses so that they can continue to support a well-functioning economy through the business cycle," Waller explained.

Banks' stress tests involve how they would respond to potential economic and financial crises.