Article in Journal

Finance and Climate Change Risk: Managing Expectations

Claudio Borio, Stijn Claessens, Nikola Tarashev
CESifo, Munich, 2023

EconPol Forum 24 (1), 5-7
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  • The financial sector has a key role to play in supporting the green transition
  • It is unrealistic to expect financial markets to induce the green transition unless the right signals come from the real economy
  • Unrealistic expectations can set the financial sector up for failure and derail the green transition
  • Risks to financial stability stem from exposure to overvalued emission-intensive assets, but also to overvalued “green” assets or assets that purport to be green

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