MNI BRIEF: Brainard Urges Progress on Fed Climate Stress Tests

Federal Reserve Governor Lael Brainard on Thursday called for the Fed to "move ahead with the first generation of climate scenario analysis" to identify risks and potential issues and inform refinements to models, data and financial disclosures.

Regulators at the ECB, in Canada, France, and the UK have already undertaken climate change analyses and the Fed is "actively learning from these early adopters," she said in remarks prepared for a Boston Fed conference on stress testing.

"Scenario analysis should ultimately facilitate estimating the possible effects on individual financial institutions as well as on financial markets more broadly. By systematically modeling the effects of climate-related risks across the financial system, scenario analysis can help inform risk management at the level of individual financial institutions and more broadly," she said.

MNI has reported that climate change scenario analyses is a top item on the agenda for the next regulatory chief at the Fed, a position for which Brainard is a leading contender.