Bank of England Head Rebuts Critics of His Global Warming Remarks

Bank of England Governor Mark Carney struck back on Thursday at critics of his recent remarks about the effect of climate change, saying it has real effects on the insurance industry, which the central bank regulates.

He said the Group of 20 leading industrialized nations had this year asked the Financial Stability Board, which coordinates financial regulation of the G20 and which Carney chairs, to produce an assessment of the implications of climate change for financial stability.

"One thing we don't like as central bankers, as people responsible for financial stability and as participants in an economy is [a] jump to distress, abrupt changes, and we can avoid those with better information," Carney said.

Carney delivered a speech on the issue last week to a Lloyd's of London insurance market event and was slammed afterward for overstepping his mandate at a time when central banks are struggling to reignite growth and raise inflation.

Carney was asked about the issue at a seminar in Lima on Thursday at the meeting of the International Monetary Fund, and he raised it again at a panel discussion two hours later.

Carney says that in addition to the physical costs the insurance industry faces due to extreme weather, there is insufficient information about the effects climate change could have on investment.

He has referred to "stranded assets," the concept that carbon-rich deposits like coal and oil might lose their value if the world shifts away from carbon.

He said it was a "market failure" that there is not information about carbon effects of trillions and trillions of dollars of potential investments.

More such information would help smooth the transition to a world that uses less carbon, which would be good for financial stability, he said.

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