US Fed set to join climate-change grouping for central banks

[WASHINGTON] The Federal Reserve expects in coming months to join the Network for Greening the Financial System (NGFS), a group of 75 central banks set up to combat climate change by better understanding the risks it poses to economies.

"We have requested membership. I expect that it will be granted," Fed vice-chair for supervision Randal Quarles told a hearing before the Senate Banking Committee on Tuesday. He said the Fed could probably join before the NGFS's annual meeting in April.

The NGFS requires its members be signed up to the Paris Climate Accord. US President Donald Trump announced in 2017 that he was withdrawing the US from the pact, but President-elect Joe Biden has pledged to rejoin as he makes fighting climate change a key focus for his administration when he takes office in January.

The Fed signalled earlier this year that is expected to become a member of the group at some point. It has been talking more about the threat of climate change, though critics often accuse the central bank of taking a back seat on the issue compared with the efforts of its major peers.

For the first time, the Fed also included the risks of climate change in its Financial Stability Report, released on Monday. The agency noted that severe, abrupt storms could lead to market swings - including instant changes in the value of real-estate harmed in a disaster. The trend towards higher global temperatures "adds a layer of economic uncertainty and risk" that the central bank is trying to incorporate into its thinking.

BLOOMBERG