The Bank of England published a new discussion paper Wednesday which lays outs how it will test the country's financial system and its resilience to climate change.
In a statement Wednesday, the central bank said it would use the paper to consult stakeholders on how the exercise would be designed. These stakeholders range from economists and climate scientists to financial firms, among others.
The Bank said the 2021 biennial exploratory scenario (BES) exercise would be used to, "test the resilience of the current business models of the largest banks, insurers and the financial system to climate related risks."
It's envisaged that this will help to provide information on the "scale of adjustment" that will be needed over the next decades in order for the system to withstand any associated effects.
In a separate announcement, the bank explained the "key features" of the upcoming BES. These include three climate scenarios which look at the impact of taking early, late or no extra policy action on "global climate goals."
The U.K.'s central bank is inviting stakeholders to send through comments on its discussion paper by March 18, 2020.
"The BES is a pioneering exercise, which builds on the considerable progress in addressing climate related risks that has already been made by firms, central banks and regulators," Mark Carney, the Bank of England's governor, said in a statement.
"Climate change will affect the value of virtually every financial asset; the BES will help ensure the core of our financial system is resilient to those changes," he added.
