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Iceland: Financial Sector Assessment Program-Technical Note on Management and Supervision of Climate-Related Financial Risks in the Banking Sector
Author:
International Monetary Fund. Monetary and Capital Markets Department
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2023: Issue 278
Language:
English
Publication Date:
28 Jul 2023
DOI:
https://doi.org/10.5089/9798400248955.002
ISBN:
9798400248955
ISSN:
1934-7685
Pages:
60
Keywords:
climate-related financial risks; government initiative; EU norm; Climate-Related Financial risk; Iceland's strategy; Climate change; Commercial banks; External balance assessment (EBA); Credit risk; Global
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This technical note on Iceland presents analyses management and supervision of climate-related financial risks in the banking sector. The Icelandic authorities are committed to addressing climate change issues and reaching ambitious objectives to reduce greenhouse gas emissions. Domestic coordination with the Central Bank of Iceland (CBI) should be enhanced to support adequate consideration of climate-related financial risks within the financial sector. CBI should as soon as possible address the data quality and availability issues on climate-related financial risks. CBI has started to incorporate climate-related financial risks within the macroprudential surveillance and supervisory processes. The intensity and thoroughness of systematic supervision of climate-related financial risks within the banking sector should be gradually increased. In addition, banks should fully incorporate climate-related financial risks into their risk management frameworks in addition to their commendable efforts toward transparency. Finally, CBI should determine whether banks’ capital and liquidity buffers are adequate to cover climate-related financial risks.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund