Brazil Central Bank president talks transition to green economy
The president of Brazil’s Central Bank, Roberto Campos Neto, said today (Nov. 3) that the climate change was incorporated into the risk assessment of central banks as it affects monetary policy as well as price stability.
Campos Neto joined an online event promoted by the Brazilian pavilion at the United Nations Climate Summit (COP26) on the Central Bank’s sustainability agenda.
Campos Neto said banks are running analyses to gauge how this climate risk variable may impact the financial system, consequently changing prices and reaching the debate on cleaner models for electric energy and food production.
“The degradation of the environment affects monetary policies. We saw it in Brazil with the first wave [of the COVID-19 pandemic] and later on we had frost that made an impact on food production, as well as a number of climate events changing supply chains,” he said. “For us, it’s important to picture this stability over time so that this monetary policy can be more efficient,” he added.
In his view, due to this set of drivers, the post-pandemic scenario should delay Brazil’s transition into a green economy, and banks all across the world will have to be creative in how this transition will be financed.
“This transition into a green economy will be more difficult than we imagined. That’s why it’s important to keep creative in the financing of this transition,” he argued.
Transparency in information regarding green production was one of the topics mentioned by Campos Neto as necessary to help in this process. He said that the Central Bank has worked to collect and to make available as much information for the development of this new financial system as possible, amid a capital market that channels goods linked to a green economy.
The president of the Central Bank once again argued for the pricing of carbon credits and said that COP26 provides an invaluable chance to debate the issue.
“We understand there are idiosyncrasies in every region and culture, and that pricing may be the best way to allocate resources to those who have more and aim at a higher sustainability and those that have sustainability but lack the resources. This generates market, and if we can build a bridge and create a sustainable environment thought carbon pricing—one that makes sense, of course—we’ll be able to continue on to the next stage,” he stated.
