The shift to a low-carbon economy is "underway" and sectors like oil and gas, as well as the banks that loan money to them, are exposed to risks from climate change that could spill over into destabilizing "fire sales," the Bank of Canada said Thursday.
The central bank listed climate change as one of six vulnerabilities in the Canadian financial system in a report released May 16. The report, called the Financial System Review, marks the first time the Bank of Canada has explored the issue in depth as part of its examination of risks to the nation's financial stability.
The Bank of Canada's acknowledgement of climate-related risk in Thursday's report is significant, given that it's the institution that promotes economic and financial welfare in the country, including through setting the key interest rate and influencing the money supply.'
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