Under all possible scenarios, climate-related risks will have consequences for the economic outlook, for the financial system in which central banks operate and, thus, for the conduct of monetary policy. The timing and severity of these consequences depend on how swift and effective transition policies are.

Moreover, climate change poses new financial risks to central banks’ monetary policy operations. Climate-related financial risks could impact directly on both central bank counterparties and the financial assets used in monetary policy operations (as collateral for credit operations or for outright purchases).

This report analyses possible changes to three of the most important policy fields: credit operations, collateral policies, and asset purchases. The review concentrates on potential measures on the asset side of a central bank’s balance sheet.