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Source: Bank for International Settlements

I want to thank the Center for American Progress for inviting me to join you in discussing climate change and the U.S. financial system. Let me start by noting these are my own views and do not necessarily reflect those of the Federal Reserve Board or the Federal Open Market Committee.

Climate change and the transition to a sustainable economy have important implications for the financial system. The financial system can be a powerful enabler to help the private sector manage climate-related risks and invest in the transition. It is vitally important to strengthen the U.S. financial system to meet the challenge of climate change.

Meeting the Challenge of Climate Change

Climate change is one of the major challenges of our time. There is growing evidence that extreme weather events related to climate change are on the rise- droughts, wildfires, hurricanes, and heatwaves are all becoming more common. Climate-related events are already adversely affecting the lives of many Americans. The economic and financial impacts are also increasingly evident: we are already seeing elevated financial losses associated with an increased frequency and intensity of extreme weather events. Some have described Pacific Gas and Electric’s bankruptcy as the first climate-related bankruptcy of a major U.S. corporation.5

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