Prudential regulation instruments | Nature Local weather Change

Diego Hidalgo-Oñate from Jaume I College, Spain, and co-authors carried out a scientific overview of what climate-related prudential regulation instruments at present exist and the way they might assist handle local weather threat in banking. The authors first describe the general panorama of the literature, together with its evolution and geographic distribution. They then determine the instruments which are probably the most cited, together with disclosure necessities, climate-related stress testing, differentiated capital necessities, focused refinancing strains and inexperienced finance guides. The authors additionally level out that there are gaps that would promote future analysis, together with a inexperienced bubble, double materiality, interactions between insurance policies, compound dangers, small and medium enterprise banking, and financial institution governance.