Bank of England launches climate stress test for banks and insurers

FILE PHOTO: The Bank of England and Royal Exchange are reflected in a puddle as a pedestrian walks past, amid the coronavirus disease (COVID-19) outbreak in London, Britain, November 19, 2020. REUTERS/Simon Dawson

LONDON (Reuters) – The Bank of England on Tuesday set out its first stress test to check the financial system’s ability to cope with climate change, saying the results will not be used to determine capital requirements.

The test will scrutinise the resilience of Britain’s biggest banks and insurers to stresses from shifting to a net zero-carbon economy over coming decades.

“The end result will be more robust management of climate related financial risks across the sector,” BoE Governor Andrew Bailey said in a statement.

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