Global Central Bankers Tread Wary Path to Green Scenario Analysis
The central-bank group focused on climate risk, the Network for Greening the Financial System (NGFS), today issued its latest assessment of financial scenario-analytic approaches. This will guide the FRB as it advances the big-bank supervisory guidance Gov. Brainard recently signaled, but also reinforce those in the U.S. and elsewhere who fear that climate-risk scenarios need additional development before clear conclusions may be drawn from their results. The type of binding stress tests sought by Democrats (see FSM Report GREEN9) are also a long way off.
FRB-NY Analysis: BHC Exposure to Open-End MMFs Warrants Supervisory Attention
A new blog post from the Federal Reserve Bank of New York tackles an issue left hanging in the FSB’s new MMF-reform options (see FSM Report MMF18): the fire-sale risk posed by open-end funds. Reiterating that open-end MMF spillover risk has increased due to their growth and correlation, new quantification shows a six-fold increase in risk to U.S. BHCs since 1996.