Climate Change Could Trigger Global Financial Crisis
A top U.S. financial regulator is worried that climate change could threaten global financial markets.
Rostin Behnam, a commissioner at the Commodity Futures Trading Commission (CFTC), said that the financial system was at risk from the growing frequency and severity of storms. “The impacts of climate change affect every aspect of the American economy – from production agriculture to commercial manufacturing and the financing of every step in each process,” Behnam said at the meeting of the CFTC’s market risk advisory committee on Wednesday. “As most of the world’s markets and market regulators are taking steps towards assessing and mitigating the current and potential threats of climate change, we in the U.S. must also demand action from all segments of the public and private sectors, including this agency.”
He added: “Our commodity markets and the financial markets that support them will suffer if we do not take action to mitigate the risk of contagion.”
The message is not necessarily a new one, but it is significant since it comes from the CFTC, which is not exactly a hippy enclave. Also of significance is the fact that Behnam was appointed to the CFTC by President Trump, although by law the vacancy that he filled had to be a Democrat.
Behnam will help setup a panel of experts to study the risks to the financial system from climate change.
“If climate change causes more volatile frequent and extreme weather events, you’re going to have a scenario where these large providers of financial products — mortgages, home insurance, pensions — cannot shift risk away from their portfolios,” Benham said in an NYT interview. “It’s abundantly clear that climate change poses financial risk to the stability of the financial system.” Related: OPEC’s Struggle To Avoid $40 Oil
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