Josh Galper on Dealing with Climate Risk and Its Potential Impact on US Financial Markets
Macro Musings with David Beckworth
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Climate Risk Tax
Climate risk could be used as another way to maybe require more capital funding on a bank's balance sheet. If they're holding assets that might be risky in terms of climate risk, more buffer because this asset might lose value in an acute crisis. That will lead to banks and other regulated entities saying logically, do we want to hold this asset in the collateral space? We talk about cheapest to deliver. But if you then apply a climate risk tax or a climate risk element across capital markets, that changes the calculus entirelyabout what that cheapest to deliver is.
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