Central Bank’s Support for Climate Action

Abstract

Central banks worldwide are increasingly recognizing the financial and systemic risks posed by climate change and are investigating approaches to mitigate them. This study provides insights into the reasons central banks should be involved in and what policy tools they can use for climate action, such as incorporating climate risks into monetary policy, supporting green financing, and participating in international climate efforts. It also provides arguments about these banks’ mandates and roles in climate issues, from risk assessment to the active promotion of sustainability. This paper emphasizes the need for central banks to adapt to the rising climate issues and collaborate to secure a sustainable and stable financial future.