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06 Februar 2012, The Guardian

Carbon bubble: Bank of England's opportunity to tackle market failure

Article by Ben Caldecott and James Leaton

The depth of the financial system's exposure to high carbon and environmentally unsustainable investments could be a systemic risk that threatens economic security. In a letter sent to Sir Mervyn King, the governor of the Bank of England, a coalition of investors, politicians, and academics recently urged the bank to investigate these issues in order to prevent the profound harm that could be wrought by an over-exposure to high carbon assets and a rapid shift in their values.

In an important reply, the governor has now accepted that there is a need for further evaluation and it is encouraging to see the bank willing to consider the levels of fossil fuel exposure as a potential risk to financial stability. We believe this process will serve as an important test of whether anything has been learned from the sub-prime crisis.

The Bank of England has set out its criteria for what constitutes a threat to financial stability...

Read the Guardian CIF article

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