Reserve Bank working to increase resilience to climate change

“We are the kaitiaki (guardians) of the financial system, tasked to maintain and enhance financial stability,” Orr said. “Historically, economic wellbeing and prosperity were built with the benefit of a stable climate. As the climate continues to change, wellbeing and prosperity are harmed. To deliver on the Reserve Bank’s purpose, it’s important that we understand this context.”

RBNZ is cooperating with key New Zealand organisations and over 110 central banks worldwide to better understand and integrate climate considerations into its operations.

“Assessing material risks to banks and insurers, and the financial system as an ecosystem, is our core business,” Orr said. “Financial stability is best maintained when all relevant risks are identified, priced, and allocated to those best able to manage them. To meet our financial stability objective, it’s important for us to take account of the current and future impacts of climate change.”

According to the RBNZ, the basis for its work on climate change is guided by the Reserve Bank Act. Orr said the new financial policy remit issued by the minister of finance highlights the importance of the Reserve Bank being concerned about climate change.

With climate impacts being increasingly felt in many countries,  it is important to act to reduce risks to the financial system, Orr said.