Top central bankers believe they should be playing a role in tackling climate change (“Prepare for impact on banks from green stress tests”, Markets Insight, June 18). To that end, they seem tempted to use certain types of powers that they have as prudential regulators. There is a clear difference between being appropriately mindful, and turning into an outright regulator, of the green policies that businesses should be implementing to meet their environmental, social and governance responsibilities.
Financial regulators should no doubt do the first, but forget about the other at this time. As virtuous as climate risk management concerns may be, they remain largely incidental to the basic vocation of financial regulators regarding the stability of financial systems or the protection of investors. Trying to corollate the two in the context of a Climate Change Conference love-in is more ideology than effective action.
Central bankers should not lose sight that all sectors of the legal economy deserve access to the services of banks and capital markets. They also deserve the protection associated to their management of systemic risk, equally and without discrimination against any group of legitimate stakeholders, whether they be high or low carbon generators or even if their production is not green enough in the eyes of the buyside activists.
If regulators feel an urge to surf the wave of green militantism, they should start by effectively regulating the operations of crypto miners. After all, these bitcoin market infrastructures are at the crossroads of global warming and the next systemic crisis that they will have to manage.
Jean Martel
L’Île Bizard, QC, Canada
