Financial Stability Review no. 23: Financial Stability Review no. 23 - June 2019

The 23rd edition of the Banque de France’s Financial Stability Review is entitled “Greening the financial system: the new frontier”. Climate change, whose consequences on the environment are already being felt, is a source of risks for the economic system and the financial sector. A profound transformation of our economy towards a new model of sustainable growth, based on “green finance”, is therefore necessary. To shed light on these questions, the Banque de France has brought together in this publication the points of view of scientists, academics, industry representatives and public authorities. This review shows the extent of climate change, assesses its potential financial and macroeconomic impacts and highlights the opportunities associated with financing the transition to a low-carbon economy. To meet the challenge of climate change, financial actors, both public and private, have a key role to play in financing this transition, whose amounts are still well below those required. This is particularly true for developing countries, which are highly exposed to the negative effects of climate change and will have significant financial needs to achieve the essential mitigation and adaptation efforts.