The annual report highlighted climate change as a new threat to the U.S. Economy for the first time. CongressThe country’s top financial regulators. The Financial Stability Oversight Council listed several ways the issue could affect the economy, including possible loan loss after natural disasters such as floods or fires that have become increasingly frequent.
“Increased frequency, severity, and duration of acute physical risks events and longer-term chronic phenomena as a result of climate change are expected cause increased economic and financial cost,” the report states. Report said.
The council made several recommendations to combat climate-related financial risk. These included making strides in acquiring more data to help them assess the perils, and creating an inter-agency group that can monitor the threats.
This is the inaugural annual report Joe BidenThe governmental organization responsible for assessing financial system risks and presenting them to Congress,’s presidency. Biden’s administration has made climate change a top priority since his election. This is a stark contrast with his predecessor’s decision not to withdraw the U.S.from the Paris climate accord.
Jerome Powell (Federal Reserve Chair) is the Treasury Secretary. Janet Yellen, and the heads of any other regulatory agencies, including the Securities and Exchange Commission and the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
Congress created the council in 2010 in an effort to close the gaps in coordination between financial regulators that were exposed during 2008’s financial crisis.
Yellen said Friday that financial markets were in turmoil following COVID-19’s March 2020 impact. The Federal Reserve and other agencies have responded quickly to this situation. She said that the response showed the “financial sector is far more shock-resistant” than it was before the 2008 crisis.
Yellen stated that while there have been some improvements, the council still considered financial stability to be more risky than the period prior to the pandemic.
Cybersecurity is another emerging threat that was identified in the council’s report. The council suggested that more must be done to protect banks from ransomware attacks, malware attacks, data breaches, and other financial institutions.
The report also highlighted how much is still unknown. The report highlighted concerns about the rapidly-spreading Omicron virus, a persistent spike in inflation and the possibility that financial turmoil in China could negatively impact the U.S. economy and global economy.
“Global economic activity during the COVID-19 period has been unusually volatile with periods of economic shutting down followed by rapid growth amid the reopening,” said the report.
This report was compiled by the Associated Press.