From Price Stability to Climate Stability: The Evolving Mandates of Central Banks

As climate change threatens financial stability, the role of central banks in mitigating impacts is gaining importance. Traditionally tasked with maintaining financial and price stability, central banks now face the challenge of integrating climate-related risks into their policy frameworks. Yet, the extent of their involvement remains a subject of debate. While some central banks have proactively adopted climate change mitigation strategies, others have retained a more conservative stance. The discrepancy in approach reflects differing legal frameworks, mandates, and policy tools. This research emphasizes the need for international cooperation among central banks and other financial regulators to effectively address climate change-associated risks.