Treasurer Josh Frydenberg has clamped down on suggestions that central banks could be forced to take drastic action to ward off a climate-related financial crisis.
A report from the Bank for International Settlements, released on Wednesday, warned about the prospect of “green swan” climate change events that could see central banks forced to purchase stranded carbon producing assets in order to prevent a financial crisis.
“For example, a new financial crisis caused by green swan events severely affecting the financial health of the banking and insurance sectors could force central banks to intervene and buy a large set of carbon-intensive assets and/or assets stricken by physical impacts,” the report reads.
But speaking at a doorstop interview in Canberra, Mr Frydenberg instead urged the need for a “balanced approach” to mitigating climate risk.
“Our own Reserve Bank of Australia has talked about the importance of the issue of climate change and how it is working on the impacts of that to the economy,” Mr Frydenberg told reporters.
“But also, you’ve got APRA and ASIC who have also talked about the climate change issue. But what the report also points out is the need for a balanced approach; a balanced approach which sees not only emissions reduction, but adaptation, mitigation and resilience measures put in place without compromising the strength of the economy.”
When asked about the possibility of the RBA purchasing stranded assets such as coalmines or fossil fuel power stations, Mr Frydenberg said he “can’t see that happening”.
The comments came as Finance Minister Mathias Cormann addressed the 2020 Davos Summit, saying that Australia would meets its Kyoto and Paris targets and that the country “absolutely does its bit when it comes to effective action on climate change”.
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