Bank of England and Egyptian Central Bank Join Forces to Combat Climate Crisis

Published on: 31 July 2022
by KnowESG
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A little more than 100 days remain until this year's United Nations Conference of Parties on Climate Change (COP27), and the Bank of England and the Central Bank of Egypt are meeting to examine climate concerns and their potential impact on world economies.

As part of a British government-funded technical cooperation programme, Bank of England employees share their expertise in analysing, managing, and comprehending the consequences of climate change on financial institutions and financial stability.

The three-day event will also draw from the work of the Network for Greening the Financial System (NGFS), which unites 116 central banks and financial regulators from around the world, including the CBE, to create recommendations and exchange best practices in the fight against climate change.

The event will be opened by Sarah Breeden, who leads the Bank of England's work on climate change and has been a member of the NGFS Steering Group since its creation in 2017.

The results of the Bank of England's Climate Biennial Exploratory Scenario (CBES), which examines the financial risks posed by climate change to the top UK banks and insurers, were announced in May of 2017.

As part of the workshop, key findings and insights from the exercise will be shared, allowing the CBE to understand how climate risks are managed elsewhere.

Bank of England specialists have also assisted the CBE and other central banks—including those in Sierra Leone, Morocco, and the Southern African Development Community—in coping with the impact of the COVID-19 pandemic, as well as with data analytics, cyber security, and central bank digital currency, all of which will contribute to the continent's financial stability and resilience.

Gareth Bayley, the UK’s Ambassador in Cairo, said: 

“I am delighted to see this latest stage in our climate cooperation with Egypt, as our central banks meet to discuss how to tackle the economic effects of climate change. This is a vital part of the conversation. If we are to deliver on the commitments agreed at COP26 as part of the Glasgow Climate Pact, we need to consider smart and creative responses to the financial risks posed by the changing climate. The Bank of England has world-leading expertise in this area, and I am proud that we are working with our Egyptian partners to share our experience and help deliver a successful COP27.”

Mai Aboul-Naga, First Sub-Governor at the CBE, said: 

“Climate change is one of the most prominent areas of sustainable finance. It has brought about new types of risks that should be accounted for. The transition to lower carbon economies needs to be gradual and well informed to ensure financial and banking stability, as banks will have an active role in facilitating this transition.”

“The Bank of England is a pioneer in climate finance and has continuously provided support to the CBE in building its capacity to address these risks. We look forward to our future cooperation towards developing more sustainable economies,” she added.

Breeden — who is also the Executive Director for Financial Stability Strategy and Risk at the Bank of England — further commented that “the challenges posed by climate change are very significant, and if we are to address them successfully, we will need to share expertise across institutions.”

“This Climate Scenario Analysis Workshop we are carrying out is a practical example of the international cooperation needed. The Bank of England’s staff have been heavily engaged in scenario analysis, modelling the financial risks that arise from these, and embedding climate change into our supervisory approach. We look forward to sharing some of our expertise with our partners at the Central Bank of Egypt.”

This initiative is a part of the UK-Egypt Green Partnership, the broader effort between the UK and Egypt to implement the commitments and processes agreed upon at COP26 and to ensure a smooth transition to Egypt's COP27 Presidency.

Source: ZAWYA

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