Powell Says Fed Likely to Require Banks to Test for Climate Risk

The Federal Reserve will probably end up requiring banks to conduct tests to judge their vulnerability to the effects of climate change, Chairman Jerome Powell suggested on Thursday.

“My guess is that’s a direction we’ll go in but we’re not ready to do yet,” he told the Senate Banking Committee.

Some European central banks are already running climate stress scenario exercises for their banks to undergo. They are designed to ascertain the banks’ readiness and resiliency to extreme weather events and other long-term effects of a warming climate.

Read More: Fed’s Powell Differs With European Peers on Climate Policy

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