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Although climate-induced liquidity risks can cause significant disruptions and instabilities in the financial sector, they are frequently overlooked in current debates and policy discussions. This paper proposes a macro-financial agent-based integrated assessment model to investigate the transmission channels of climate risks to financial instability and study the emergence of liquidity crises through interbank market dynamics. Our simulations show that the financial system could experience serious funding and market liquidity shortages due to climate-induced liquidity crises. Our investigation contributes to our understanding of the impact - and possible solutions - to climate-induced liquidity crises, besides the issue of asset stranding related to transition risks usually considered in the existing studies.

Climate change poses several risks to the value of financial assets and financial stability. The study conducted in this paper focuses on the German banking sector and estimates its exposure to climate risks arising from a transition to a carbon-neutral economy. Our analysis identifies the energy, transportation, and manufacturing sectors as the most sensitive to transition risks and shows that the German banking sector's direct exposure to climate transition risks is non-negligible. Moreover, it points out that an amplified exposure to transition risks characterizes large private banks. These findings are comparable to other countries' exposures and relevant to financial supervision and regulation, calling for increased engagement to assess, measure, and manage climate-related financial risks. Der Klimawandel birgt sowohl Risiken für den Wert unterschiedlicher Finanzanlagen als auch die Stabilität des Finanzsystems. Die vorliegende Studie erfasst für den deutschen Bankensektor die Exposition gegenüber Klimarisiken, die sich aus einem Übergang zu einer kohlenstoffneutralen Wirtschaft ergeben. Unsere Analyse zeigt eine nicht zu vernachlässigende Exposition des deutschen Bankensektors gegenüber Klimarisiken und identifiziert die Sektoren Energie, Transport und Produktion als die empfindlichsten gegenüber Übergangsrisiken. Darüber hinaus kann eine erhöhte Betroffenheit von großen Privatbanken gegenüber Klimarisiken festgestellt werden. Die Ergebnisse zur Exposition des deutschen Bankensektors sind mit bestehenden Untersuchungen anderer Länder vergleichbar und legen ein verstärktes Engagement der Finanzaufsicht und -regulierung bei der Bewertung, Messung und Steuerung klimabezogener Finanzrisiken nahe.

All G20 countries have adopted policies to tame financial instability in response to the COVID-19 pandemic. Post-pandemic financial measures are designed to support bank lending, boost financial markets��� liquidity, reduce banks��� funding liquidity costs, and allow for a smoother transition in monetary and fiscal policies. However, when analyzed in a broader framework that considers possible interlinkages between the pandemic and threats posed by climate change, these measures are not aligned with the goals of the Paris Agreement. Indeed, there is no evidence that recovery policies to date reflect sustainability priorities nor do they account for climate-related financial risks. The analysis carried out suggests that this failure to account for climate change could amplify the build-up of additional climate-related financial risks and of existing vulnerabilities in the financial system, leading to increased overall exposure to climate risks and thus undermining the low-carbon transition in G20 countries. Against this backdrop, the paper reviews several financial measures to avoid increasing the high carbon bias of existing policies and to explicitly address climate-related risks in the financial sector. The author proposes an enhanced macro-prudential policy framework to achieve three interrelated objectives: tackle climate-related financial risks, scale up green finance for a greener and more sustainable recovery, and preserve the global financial system���s resilience. A macro-prudential strategy aligned with the goals of the Paris Agreement is needed to address carbon bias, avoid the increase of climate-related financial risks, and reorient financial flows towards sustainable investments.���Green-enhanced��� capital requirements can be used, but they need careful calibration to prevent financial instabilities, while green liquidity instruments pose fewer implementation concerns.Climate-related large exposure limits could help contain systemic risks deriving from the materialization of climate risks.Harmonized taxonomy and enhanced climate-related disclosure requirements are critical for the correct functioning of proposed climate-related financial instruments.Implementing such instruments in a post-pandemic financial policy framework could help underpin a transformative financial response to climate change while strengthening the resilience of the global financial system. A macro-prudential strategy aligned with the goals of the Paris Agreement is needed to address carbon bias, avoid the increase of climate-related financial risks, and reorient financial flows towards sustainable investments. ���Green-enhanced��� capital requirements can be used, but they need careful calibration to prevent financial instabilities, while green liquidity instruments pose fewer implementation concerns. Climate-related large exposure limits could help contain systemic risks deriving from the materialization of climate risks. Harmonized taxonomy and enhanced climate-related disclosure requirements are critical for the correct functioning of proposed climate-related financial instruments. Implementing such instruments in a post-pandemic financial policy framework could help underpin a transformative financial response to climate change while strengthening the resilience of the global financial system.

The awareness about climate-related financial risks is gaining momentum both in the policy and academic debates. The role of countries' institutional dimension and central bank governance structures in the adoption of green prudential regulation is, however, overlooked in the current discussion. The paper fills this gap by proposing an analysis of the state-of-the-art, challenges and perspectives, of ''green'' central banking. The study complements existing research that usually points to an ''extended'' monetary policy mandate, including, for example, sustainability objectives or green growth, as the primary motivation for a central bank to engage in ''green'' financial policymaking. According to our research, the decision to implement green regulations is not exclusively related to the mandate per se, but on the central bank's independence and on how the interaction between the monetary and prudential policy is structured. Moreover, the higher exposure to climate-related adverse events also plays a crucial role in the adoption of green prudential regulations. To avoid potential conflicts between monetary policy and green prudential regulation caused by existing intertwined transmission mechanisms, on the one hand, our analysis emphasizes the importance of having a central bank that hosts the green prudential regulation under its governance roof. On the other hand, when the ''green'' governance models studied in the paper are in place, the Tinbergen principle is safeguarded.

COVID-19 has quickly emerged as a novel risk, generating feverish behavior among investors, and posing unprecedented challenges for policymakers. The empirical analysis provides evidence for a significant negative effect on stock markets of COVID-19-related measures announced in the Euro Area from January 1st, 2020 to May 17th, 2020. Further negative effects are detected for movements in bond yields, EU volatility index, Google trends, and infection rates. Health measures have, instead, a significant positive effect, while fiscal policy announcements are not significant. COVID-19 hat sich schnell zu einem neuartigen Risiko entwickelt, das bei Investoren ein nervöses Verhalten hervorruft und die politischen Entscheidungsträger vor beispiellose Herausforderungen stellt. Die empirische Analyse findet einen signifikanten negativen Effekt auf Aktienmärkte durch auf COVID-19 bezogene Politikmaßnahmen, die in der Eurozone zwischen dem 1. Januar 2020 und dem 17. Mai 2020 erlassen wurden. Darüber hinaus kann ein negativer Zusammenhang zwischen Aktienmärkten und Anleiherenditen, dem EU-Volatilitätsindex, Google-Trends-Daten und Infektionszahlen festgestellt werden. Während für Gesundheitsmaßnahmen ein signifikanter positiver Effekt gefunden wurde, waren fiskalpolitische Ankündigungen nicht signifikant.

This paper investigates the impact of climate-related fiscal and financial policies on CO2 emissions implemented by G20 countries in the period 2000-2017. The analysis show that the impact of various policy instruments is heterogeneous across the carbon emissions distribution. In particular, the effect of a green investment bank is significant across all percentiles and contributes to improving environmental quality. Moreover, our findings suggest that what matters is not the financial sector size per se or the amount of credit devoted to the private sector, but rather the type of finance. This suggests that policymakers and researchers should devote more effort to calibrate their policy instruments and develop an efficient policy mix to achieve climate change mitigation, especially in countries with high carbon emissions. Dieser Aufsatz untersucht die Auswirkungen der klimabezogenen Steuer- und Finanzpolitik auf die CO2-Emissionen der G20-Länder von 2000 bis 2017 mithilfe der Quantile-Regression-Methode. Die Analyse zeigt, dass die Auswirkungen verschiedener politischer Instrumente über die Verteilung von CO2-Emissionen verschieden stark ausgeprägt sind. Der Effekt einer grünen Investmentbank hingegen ist in allen Perzentilen signifikant und trägt zur Verbesserung der Umweltqualität bei. Darüber hinaus deuten unsere Ergebnisse darauf hin, dass weder die Größe des Finanzsektors per se noch die Höhe der dem Privatsektor gewährten Kredite, sondern vielmehr die Art der Finanzierung entscheidet, wie erfolgreich der Finanzsektor einen Beitrag zum Klimaschutz leisten kann. Daraus folgt, dass politische Entscheidungsträger und Forscher mehr Anstrengungen unternehmen sollten, ihre politischen Instrumente anzupassen und einen effizienten Policy-Mix zu entwickeln, um dem Klimawandel, insbesondere in Ländern mit hohen Kohlenstoffemissionen, erfolgreich entgegenzutreten.