Climate Change on the Policy Agenda of Central Banks in Central and Southeast Europe

Abstract

Central bankers around the world have understood that climate-related risks are a challenge to financial stability and are slowly adjusting their mandates. Central banks in Central Europe (CE) and Southeast Europe (SEE) are voicing the issue of risk related to climate finance, and some of them are promoting and measuring the performance of sustainable finance activities to some extent. The priorities of the central banks in CE and SEE will, evidently, be aligned with the priorities set by the European financial sector regulators, notably with the priorities in banking supervision within the Single Supervisory Mechanism and the European Banking Authority’s requirements for banks to include ESG risks in their internal governance and risk management. This paper aims to contribute to the emerging literature on modalities of incorporation of ‘green’ factors into the policy toolboxes of central banks. It presents landmark examples of climate change initiatives on the policy agenda of the central banks in CEE and SEE, from central bank declarations and pledges, dedicated programmes, analytical commentaries and reports, to supervisory expectations based on non-binding guidelines, and formalised disclosure of climate risk exposure and risk management.