Asia | Battling against climate change: what role can central banks play?

Summary

Asia is at the frontier of battling against climate change while the central banks have already had a series of initiatives to link monetary policy to climate change risks.

Key points

• Key points:
• How to balance environmental protection and economic growth has invariably been challenging to those policymakers of Asian countries.
• To balance growth and environmental protection as well as to encourage the enterprises and individuals to support transformation to a low carbon economy, central banks’ monetary policy can play an important role.
• In this report we summarize the recent development of climate change related monetary policy initiatives for six ASEAN countries including Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam, plus Japan, China, Hong Kong and Korea.
• Asian central banks have begun incorporating climate-related risks into financial stability monitoring and macro-prudential supervision or adopted green finance policies.
• Main initiatives include promoting green finance and sustainable funding options through amending the regulatory framework on banks, encouraging green loans and bonds, and introducing climate change considerations in their monetary and financial policy operations.

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