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MNI BRIEF:Fed Launches Climate Scenario Analysis For Big Banks

(MNI) WASHINGTON

The Federal Reserve is asking the six largest U.S. banks to figure out how they would react to climate-related shocks to gain a better understanding of how global warming will affect the financial system.

“The Fed has narrow, but important, responsibilities regarding climate-related financial risks – to ensure that banks understand and manage their material risks, including the financial risks from climate change,” Vice Chair for Supervision Michael Barr said in a statement Tuesday. “The exercise we are launching today will advance the ability of supervisors and banks to analyze and manage emerging climate-related financial risks.”

Banks are expected to deliver their results by July 31. The Fed stressed this effort at climate scenario analysis “is distinct and separate from bank stress tests.” One key scenario includes mapping out the effects of a severe hurricane in the U.S. Northeast.

MNI Washington Bureau | +1 202 371 2121 | pedro.dacosta@marketnews.com
MNI Washington Bureau | +1 202 371 2121 | pedro.dacosta@marketnews.com

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