UK banks could be tested for climate change resilience from next year, according to Bank of England governor Mark Carney
UK bank stress tests could include resilience to the impact of climate change from next year, Bank of England governor Mark Carney said.
Carney said he was weighing up whether the risks and opportunities of climate change should included in the test, which is known as the exploratory scenario, the Financial Times reported.
Banking stress tests explore the potential impact of a hypothetical scenario to ensure they are resilient and have enough capital to withstand shocks.
The exploratory scenario test was introduced in 2017 and takes place every two years, with the next one due in 2019. It has no pass mark, unlike the main, annual health check which all lenders passed this year.
The first exploratory scenario in 2017 examined the impact of fintech on the banking system.
“From the first one we learnt a lot about how the banks managed or didn’t manage these types of issues. And it was quite instructive,” Carney said in an interview with the Financial Times.
“And so the question is whether [climate change is] the next one, or the one after.”