Waller: Little function for Fed in resolving environment threats

There is no requirement for unique treatment for climate-related threats in the Federal Reserve’s monetary stability tracking and policies, Fed Governor Christopher Waller stated Thursday. Speaking at a financial conference in Spain, Waller stated he didn’t question the science of environment modification, “but my role is not to be a climate policymaker.”

Waller stated that environment modification positions both possible physical threats—such as adversely impacting residential or commercial property worths—and longer-term shift threats. As for the previous, “there is a growing body of literature that suggests economic agents are already adjusting behavior to account for risks associated with climate change,” he stated. At the exact same time, banks are currently well-prepared to get used to slow-moving and foreseeable modification. “For example, if banks know that certain industries will gradually become less profitable or assets pledged as collateral will become stranded, they will account for that in their loan pricing, loan duration and risk assessments,” he stated.

“As policymakers, we must balance the broad set of risks we face, and we have a responsibility to prioritize using evidence and analysis,” Waller stated. “Based on what I’ve seen so far, I believe that placing an outsized focus on climate-related risks is not needed, and the Federal Reserve should focus on more near-term and material risks in keeping with our mandate.”


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