On Thursday, Haruhiko Kuroda, the Governor of the Bank of Japan stated, central banks are facing new issues from climate-related risk which must be mitigated to maintaining financial stability.

“Natural disasters, such as the strong typhoon that struck Japan in October, may erode asset and collateral value, and the associated risk may pose a significant challenge for financial institutions,” said Kuroda.

He went on to add, “Climate-related risk differs from other risks in that its relatively long-term impact means that the effects will last longer than other financial risks, and the impact is far less predictable”.

“It is therefore necessary to thoroughly investigate and analyze the impact of climate-related risk,” said Kuroda.

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Tags: assets, associated risks, Bank of Japan, BOJ, central banks, climate, climate change, collateral, financial institutions, financial stability, governor, Haruhiko Kuroda, predictable, risks, value