The ‘Climate Shift’ in Central Banks: How Field Arbitrageurs Paved the Way for Climate Stress Testing

Concerns over climate-related issues have in a few years gone from the fringes of the financial sector to mainstream discussions in the boardrooms of central banks. How did we get here? Building on expert interviews, document analysis, and participant observation, this paper argues that think-tank-based ‘field arbitrageurs’ boasting financial sector careers and climate science expertise strategically advanced a risk-based frame dubbed the ‘carbon bubble’ through which they engaged central banks on climate-related issues. The frame went from the field arbitrageurs via civil servants with access to the corridors of decision-making power and then into the central banks. Thus climate-related issues came to be understood as a financial risk issue, which led to the idea of the conduct of climate stress testing. The article contributes to the study of the political economy of central banks, showing that the ‘climate shift’ was driven by actors outside the immediate remits of the central banking community in ways that highlighted an underexplored form of ‘infrastructural entanglement’ between finance, the state bureaucracy, and central banks.