Neglecting climate change endangers ECB independence, Powell keeps eye on maximum employment, and more
THE WEEKEND REVIEW – OMFIF
Latest opinion and analysis from OMFIF around the world
8-12 February 2021, Vol.12 Ed.6
Neglecting climate change endangers ECB independence: While European governments are trying hard to keep global warming below two degrees, their central banks are lowering the cost of capital for the biggest polluters. The European Central Bank and many other market observers have acknowledged climate risks continue to be mispriced in financial markets. The ECB neglects such unpriced climate risks at its own peril, writes Rens van Tilburg.
Powell keeps eye on employment: Academic circles and social media are raging with debates about President Joe Biden’s fiscal proposals. Jay Powell, chairman of the Fed, entered this arena with a speech in New York, focusing on the Fed’s maximum employment objective and the labour market situation, defending its highly accommodative stance, writes Mark Sobel.
Storm warning: Natural disasters are increasing in frequency, intensity and associated costs. For governments, they represent an important fiscal risk. For financial regulators, these so called ‘physical risks’ can develop into systemic financial stability risks. Developments in data availability and solutions are helping with the assessment and quantification of risks.
Read the SPI Journal.
Race for the future: The coming year will see the rapid development of both CBDCs and fiat-backed private money. Our review of 2020 highlights some of the key trends of the past 12 months, during which experimentation began to bear fruit. Contributions from some of the biggest names in CBDCs look ahead to the most important themes of 2021.
Read the DMI Journal.
Diem prelaunch discussion: The anticipated Diem stablecoin is due to launch this year. The cryptocurrency is largely responsible for pushing central banks into thinking seriously about digital currencies. Christian Catalini, chief economist at the Diem association, discusses the launch of Diem, outlining the stablecoin’s features, the regulatory response and associated risks.