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7th Macroprudential Policy Group Workshop

Exploring macroprudential policy to address financial stability risks of climate change and nature degradation

15 October 2024, Vilnius

Hybrid event - by invitation only

Climate change and nature degradation-related risks can have a material impact on the financial sector. The report of the joint ECB/ESRB project team on climate risk recognises that there can also be a systemic perspective with mechanisms that can amplify the losses of individual financial institutions via different transmission channels. In the same context, the European Commission has identified that prudential regulators and supervisors need to review the macroprudential framework and find an adequate manner to address the systemic aspects of climate change-related physical and transition risks.

This workshop will discuss current and possible future macroprudential measures to address risks related to climate change and nature degradation. It will also discuss the challenges in the calibration and implementation of these measures.

Programme

All times are local (CET +1)

* Indicates the presenter

8:30

Coffee & registration

9:00

Welcome remarks

Julita Varanauskienė, Deputy Governor Lietuvos Bankas

9:10

Keynote speech 
How should bank capital regulation respond to climate change?

Martin Oehmke, London School of Economics and Politics

Moderator: Tomas Garbaravičius, Lietuvos Bankas, co-chair MPPG

10:00

Session 1: Targeting systemic risks of climate change and nature degradation

The Ecosystem service degradation sensitivity indicator (EDSI): a new framework for understanding the financial risk repercussions of nature degradation

Mapping financial system interactions with drivers of nature loss – evidence from the Brazilian Amazon and Indonesian Peatlands

  • Lydia Marsden*, UCL Institute for Innovation and Public Purpose
  • Josh Ryan-Collins, UCL Institute for Innovation and Public Purpose
  • Jesse F. Abrams, Global Systems Institute and University of Exeter
  • Timothy M. Lenton, Global Systems Institute and University of Exeter
  • Discussant: Ianna Georgieva Yordanova, Danmarks Nationalbank

Moderator: Tomas Garbaravičius, Lietuvos Bankas, co-chair MPPG

11:15

Coffee break

11:45

Session 2: Mitigating climate risks and supporting the green transition

Green firms are less risky: results from a preferential capital requirement program in emerging Europe

  • Bálint Várgedö*, Magyar Nemzeti Bank and Corvinus University of Budapest
  • Csaba Burgers, Magyar Nemzeti Bank
  • Donát Kim, Magyar Nemzeti Bank and Corvinus University of Budapest 
  • Discussant: Pavol Jurča, Národná Banka Slovenska

Towards macroprudential frameworks for managing climate risk

Stephan Fahr*, European Central Bank

Moderator: Carsten Detken, European Central Bank, co-chair MPPG

12:45

Lunch

14:00

Theme discussion: the role of macroprudential policy

Impact of transitions on financial stability

  • Dirk Schoenmaker*, Rotterdam School of Management, Erasmus University, and Centre for Economic Policy Research
  • Hesse McKechnie, Deloitte

The macroprudential interest in the climate crisis

David Aikman*, King’s Business School and Qatar Centre for Global Banking and Finance

Moderator: Tomas Garbaravičius, Lietuvos Bankas, co-chair MPPG

14:45

Session 3: Increasing the resilience of the financial sector to climate risks

Principles for addressing climate systemic risks with capital buffers

Pierre Monnin*, Council on economic policies and London School of Economics and Political Science

Discussant: Fátima Silva, Banco de Portugal

Designing a macroprudential capital buffer for climate-related risks

  • Martina Spaggiari*
  • Florian Bartsch
  • Iulia Busies
  • Tina Emambakhsh
  • Michael Grill
  • Mathieu Simoens
  • Fabio Tamburrini 

All European Central Bank

Discussant: Ieva Mikaliūnaitė-Jouvanceau, Lietuvos Bankas

Moderator: Carsten Detken, European Central Bank, co-chair MPPG

16:00

Coffee break

16:15

Policy panel: Macroprudential policy to address financial stability risks of climate change and nature degradation

Panellists:

  • David Aikman, King’s Business School and Qatar Centre for Global Banking and Finance
  • Jean Boissinot, Banque de France
  • Lydia Masden, UCL Institute for Innovation and Public Purpose
  • Pierre Monnin, Council on economic policies and London School of Economics and Political Science
  • Martin Oehmke, London School of Economics and Politics

Moderator: John Fell, European Central Bank

17:15

Closing remarks

17:30

End of workshop

General information

Venue
Merchants Club
Gediminas Ave 35
Vilnius, Lithuania
Language

English

Organiser
  • Carsten Detken, MPPG co-chair, European Central Bank
  • Tomas Garbaravičius, MPPG, co-chair, Lietuvos Bankas
  • Marco van Hengel, MPPG Secretary, European Central Bank
  • Evelyn Herbert, IWG Secretary, European Systemic Risk Board
  • Anne McTaggart, MPPG Secretariat, European Central Bank
  • Rafailaki Melpomeni, MPPG Secretariat, European Central Bank
Contacts

Organising Committee
WorkshopMacropru@ecb.int

ECB-MPPG Secretariat
Anne McTaggart
+49 69 1344 6372 and +49 69 1344 6460
MPPGSecretariat@ecb.int