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Climate change could ignite a financial crisis, IMF official says

Climate change could ignite a financial crisis, IMF official says

New York (CNN Business)Climate change poses serious risks to the stability of the financial system, a senior International Monetary Fund official told CNN Business.

Tobias Adrian, director of the IMF's monetary and capital markets department, said the climate crisis could "absolutely" ignite a financial crisis.

"The climate crisis is slow in the making, but it's potentially disastrous," Adrian said in an interview from the sidelines of the Green Swan Conference, a virtual event focused on how the financial industry can take action against climate risks.

Adrian, a former official at the New York Federal Reserve Bank, pointed to how the economies of the Bahamas, Philippines and other nations have been crushed by hurricanes and typhoons in recent years.

"There are many countries where you see the climate catastrophe is catastrophic for the financial system," he said. "Even if you don't believe it's the central scenario, there is still quite a bit of downside risk. And risk management is all about making sure that even in the worst cases, you are able to survive."

'Shocks to the financial system'

The comments echo a warning made last September in a federal report that acknowledged "climate change poses a major risk to the stability of the US financial system and to its ability to sustain the American economy."

The report, published by the climate subcommittee of the US Commodity Futures Trading Commission, implored regulators to "more urgently and decisively" work to address looming economic damage from climate change.

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