Bank of England and CBE team up to tackle climate crisis

Just over 100 days away from this year’s United Nations Conference of the Parties on Climate Change (COP27), the Bank of England and the Central Bank of Egypt (CBE) are meeting to discuss climate risks and their potential impact on global economies.

As part of a technical cooperation program funded by the UK government, Bank of England staff share UK experience in analyzing, managing and understanding the effects of climate change on business finances and the stability of the financial system.

The three-day workshop will also draw on the work of the Network for Greening the Financial System (NGFS), which brings together 116 central banks and financial supervisors from around the world – including the CBE – to develop recommendations and share best practices. in the field. combat climate change.

Sarah Breeden, who leads the Bank of England’s work on climate change and has been a member of the NGFS Steering Group since its inception in 2017, will open the event.

Last May, the Bank of England released the results of its Biennial Climate Exploratory Scenario (CBES), which explores the financial risks posed by climate change for the largest banks and insurers operating in the UK.

Part of the workshop will be to share key findings and insights from the exercise, allowing the CBE to better understand how climate risks are being managed elsewhere.

Bank of England experts have also helped the CBE and other central banks – including in Sierra Leone, Morocco and the South African Development Community – cope with the impact of the COVID-19 pandemic. 19, as well as data analytics, cyber and central bank digital currency, all of which will contribute to financial stability and resilience across the continent.

Gareth Bayley, UK Ambassador to Cairo, said: “I am delighted to see this latest step in our climate cooperation with Egypt, as our central banks come together to discuss how to tackle the economic effects of climate change. It is an essential part of the conversation. If we are to deliver on the commitments agreed at COP26 under the Glasgow Climate Pact, we must consider smart and creative responses to the financial risks posed by climate change. The Bank of England has leading expertise in this area, and I am proud that we are working with our Egyptian partners to share our experience and contribute to the success of COP27.

For her part, Mai Aboul-Naga — Senior Deputy Governor at the CBE — said: “Climate change is one of the most important areas of sustainable finance, it has brought about new types of risks that need to be taken into account. The transition to low-carbon economies must be gradual and well-informed to ensure financial and banking stability, as banks will play an active role in facilitating this transition.

“The Bank of England is a pioneer in climate finance and has continuously supported the CBE in building its capacity to deal with these risks. We look forward to our future cooperation to develop more sustainable economies,” she added.

Breeden – who is also Executive Director of Financial Stability and Risk Strategy at the Bank of England – further said that “the challenges posed by climate change are very significant, and if we are to meet them successfully, we we will have to share expertise across institutions.

“This climate scenario analysis workshop that we are conducting is a concrete example of the necessary international cooperation. Bank of England staff have a strong commitment to scenario analysis, modeling the resulting financial risks and integrating climate change into our supervisory approach. We look forward to sharing some of our expertise with our partners at the Central Bank of Egypt. »

This activity is part of the UK-Egypt Green Partnership, the wider work between the UK and Egypt to deliver on the commitments and processes agreed at COP26 and ensure a successful transition to the Egyptian Presidency of COP27 .

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