Green finance will be a priority for the People’s Bank of China (PBOC) during the next five years. Climate change will be one of the factors considered in the formulation of policies for financial stability, monetary policy, and the investment of foreign-exchange reserves.
Yi Gang, Governor of PBOC, recognizes that climate change poses challenges to the financial system’s stability.
In his speech at the China Development Forum in Beijing last Saturday, Governor Yi announced:
- Climate risk factors will be incorporated into the risk management framework
- Investment of the foreign-exchange reserves in green bonds will be increased
- Investment in carbon-intensive assets will be restricted
Additionally:
- The PBOC is studying how to incorporate climate change factors into financial institutions stress testing
- Possible monetary policy incentives for financial institutions such as lower interest rates or allowing special-purpose refinancing tools to encourage carbon emission reductions
- China is cooperating with European counterparts to harmonize taxonomies (to be published this year)
- The PBOC plans to develop a mandatory disclosure system for all financial institutions and firms
Link in English:
http://www.pbc.gov.cn/en/3688110/3688172/4157443/4211225/index.html