The Impact of Climate Change on the Financial System

Central banks are starting with banking. They're quite used to using macro models and also the integrated assessment models of William North House. And what we are arguing is we need more micro models where you can have a sectoral approach, because we all know that certain sectors will be usually hit by a carbon tax. So we argue, get out of your central bank macro mode, get into a more micro and central mode in your testing. With these tests so far, I haven't seen the results of them leading the news. But if you really want to know what's going on, we have to be bolder and more precise in our approach.