Bank of England could include climate change impact in UK stress tests next year

  • The Bank of England is making plans to include the impact of climate change in its stress tests, according to the Financial Times.
  • The stress tests largely look at a bank's capital buffers in times of severe financial stress but also include an "exploratory scenario" every two years.
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The Bank of England (BOE) is making plans to include the impact of climate change in U.K. bank stress tests, the Financial Times reported Monday.

The stress tests largely look at a bank's capital buffers in times of severe financial stress but also include a separate "exploratory scenario" every two years.

In 2017, the first exploratory scenario looked at the competition from financial technology but could concentrate on climate change in 2019, the FT said.

"From the first one we learnt a lot about how the banks managed or didn't manage these types of issues," BOE Governor Mark Carney told the FT in an interview.

"And it was quite instructive. And so the question is whether (climate change) is the next one, or the one after."

Read the full story from the Financial Times here.