When big banks started failing across Wall Street
and the housing and stock markets plummeted in 2008, the world realized how
important financial regulation is for economic stability – and how swiftly the
effects can cascade throughout the economy when regulators are asleep at the
wheel. Climate change has a drastic altering effect on the global economy.
Despite Wall Street jokes about the weather being a terrible excuse for bad
economic data, climate change is now plainly fast enough to alter economic
forecasts. How long until projecting GDP is largely, if not entirely, dependent
on projected weather patterns?
These issues are already on the minds of officials. Various government and corporate organizations have attempted to model the economic implications of climate change. Climate change is a significant economic threat today. Once again, how financial regulators and central banks respond will have a big impact on how much it incapacitates the economies. In 2015, former Bank of England governor Mark Carney listed a number of climate-related hazards that might disrupt the financial system. Extreme weather costs are rising, while lawsuits against firms that contribute to climate change are dropping in value.
Nobel Laureate and American economist Joseph Stiglitz concurs. He argued that a sharp increase in carbon prices – which governments levy on companies for emitting climate-warming greenhouse gasses – could spark a new financial crisis, this time centered on the fossil fuel industry, its suppliers, and the banks that finance them, with consequences for the rest of the economy.