William Oman’s Post

EMBEDDED in NATURE The economy is embedded in nature: it is part of, and dependent on, natural resources and processes for its existence and functioning. Interacting with climate change, nature loss and transformation generates significant threats to the global economy and financial system. However, work on the implications of nature-related risks for macroeconomic and financial sector policies remains at an early stage. This note seeks to contribute to this emerging policy space in three main ways: (i) it proposes a conceptual framework for understanding nature-related risks by mapping out macroeconomic transmission channels, emphasizing their impact on the economy and financial systems through “double materiality;” (ii) it conducts empirical analysis, finding that nearly 38 percent of bank loans of the 100 largest global banks are to harmful subsidies-dependent sectors and 44 percent are exposed to conservation areas under the Global Biodiversity Framework, and that industries most exposed to nature degradation are not well prepared to manage these risks; and (iii) it discusses takeaways for macroeconomic and financial sector policies and frameworks. Keywords: #Banks, #ClimateChange, #ClimateFinance, #EcosystemServices, #Environment, #EnvironmentalPolicy, #EnvironmentalSustainability, #FinancialRegulation, #FinancialStability, #FinancialSupervision, #Global, #MacroeconomicPolicies, #Macroeconomics, #MinskyMoment, #NaturalResources, #Nature, #NatureRelatedRisks, #PlanetaryBoundaries.

Climate economy is the next big challenge. All of us must be aware of the Institutions and mechanisms that unlock climate finance and funding. A good initiative by IMF

Just completed the "Macroeconomics of Climate Change: Green Public Finance" course by the IMF. This course is a deep dive into how countries can use their wallets to actually tackle this massive challenge of Climate Change. Learned how to: 1) Turn climate worries into smart public investments. 2) Master the Climate-PIMA tool - think climate action Swiss Army Knife! 3) Unleash the power of Green PFM (it's like a superpower for a sustainable future). Feeling ready to advocate for smarter financial strategies that fight climate change! #GreenFinance #ClimateAction #Macroeconomics

#WeekendReading ⏰ From ongoing wars in #Ukraine and #Gaza to the Red Sea Crisis, geopolitical risk is central to our thinking about UK economic risk 🌍 In this blog, Deputy Director Stephen Millard got Eurasia Group's Jens Larsen's thoughts on the topic 🔽 https://hubs.la/Q02rX5ns0

Ending this week's visit in DC with the launch of our latest Inter-American Development Bank study on #ClimateChange and Sovereign #Risk: A Regional Analysis for the #Caribbean with Matthew Agarwala (Bennett Institute for Public Policy), Matt Burke (University of Oxford), Jennifer Doherty-Bigara, and Patrycja Klusak (University of East Anglia). #Climate change is an existential threat to the world economy, with complex, evolving and nonlinear dynamics that remain a source of great uncertainty. There is a bourgeoning literature on the economic impact of climate change, but research on how climate change affects sovereign risks is limited. This paper provides forward-looking regional analysis of the effects of climate change on sovereign creditworthiness, probability of default and the cost of borrowing for the Caribbean economies. Our results indicate that there is substantial variation in the sensitivity of ratings to climate change across the region which is due to the non-linear nature of ratings. Our findings improve the identification and management of sovereign climate risk and provides a forward-looking assessment of how climate change could affect the cost of accessing international #finance. As such, it leads to a suite of policy options for countries in the region. Read more here: https://lnkd.in/etT54R7P

If you are interested in the effects of climate on Caribbean Region please read our newest study commissioned by the  Inter American Development Bank

Ever come across the term ‘Special Drawing Rights’ or ‘SDRs’ and felt completely bewildered? Check out this latest podcast episode of the UBC International Relations Student Association (IRSA), where I have a conversation with an expert on the International Monetary Fund (IMF) and its SDRs: https://lnkd.in/gR2JxTCG. Mark W. Plant joins me as Senior Policy Fellow at the Center for Global Development, where he currently dedicates the bulk of his research making the case that Central Banks should Recycle their excess SDRs issued by the IMF, to promote international development and climate finance goals and prevent these potential assets from “sitting around” in a “clumsy” financial order. - We cover the basics of how SDRs are allocated to IMF member countries according to their Quota Formula, and how this can lead to inefficient distribution where advanced economies with no explicit need for these excess SDRs get allocated the most while vulnerable countries who have the highest need for SDRs have access to the least. - We analyse some different options for well-meaning advanced economies to ‘Recycle’ their excess SDRs and re-distribute these to allow vulnerable nations to benefit from them, and also talk about why Central Banks today are sometimes hesitant to let their SDRs go. This is set in the context of the history of the SDR and its establishment in 1969. Mark W. Plant is championing the cause of distributing SDRs in a careful and prudent manner through the different Trust Funds of the IMF and through Multilateral Development Banks. I’m pleased that he could join this episode and help bring out the opportunities, challenges and prospectus for SDRs in the context of increasing development and climate finance. Link to CGD's YouTube Video on 'Fighting Climate Change with SDRs': https://lnkd.in/gM7g2pWj Link to the CGD Blog on SDRs: https://lnkd.in/g4mZBRir Mark W. Plant Charlie Keohan UBC International Relations Student Association (IRSA) Center for Global Development

Very happy to see this report published today, the results of in-depth exchanges between experts in five international organizations. Many thanks to all participants for the collective and constructive work, and especially to eddy bekkers for the amazing coordination. The report stresses that climate action needs to be stepped up to meet global emission reduction targets, while contributing to broader development goals. It also makes four important contributions to that end: • The report provides a common understanding of carbon pricing metrics to improve transparency on how countries are shifting incentives for decarbonization. • The report examines the composition of climate change mitigation policies, emphasizing the important role of carbon pricing as a cost-effective instrument that also raises revenues. • It outlines how international organizations can support the coordination of policies to foster positive and limit negative cross-border spillovers from climate change mitigation policies. The report also analyses the advantages and disadvantages of carbon border adjustment policies, including their impact on developing countries. • It shows how such coordination can help to scale up climate action by closing the transparency, implementation and ambition gaps. The report also makes clear that international organizations' future work can help fill important knowledge gaps. These include a need for more granular and better data on embedded carbon prices and embedded emissions, the design of border adjustment policies and their interoperability, and other approaches to enhance cooperation to increase ambition and ensure a just transition for all. Many thanks also to the World Bank team: our trade team led by Mona Haddad with Sebastien Dessus and Maryla Maliszewska, and contributors from across the organization: Joe Pryor, Carolyn Fischer, Susanne Aakerfeld, Alexandra Campmas, Dirk Heine, Kevin Carey, and Penny Mealy. And thanks to Carl Hanlon and Melissa Bryant of course!

Climate risks pose significant challenges for the financial sector, including increased loan defaults and insurance climate due to severe weather events, impacting profitability and stability. Additionally, regulatory changes and shifting market performances toward sustainability investment may disrupt traditional business models and assets valuations. Thanks to the International Monetary Fund for this relevant course. #climaterisks #MCCx_CRFS #imf

📣 Have you wondered on the interlinkages between climate, economics and finance? Ever thought about how climate change will go on to impact economic and financial realms of the world? Experts Lars Peter Hansen Sarah Kapnick Thomas Karl and Terence Thompson will be discussing this in an upcoming webinar, co-organized with S&P Global Sustainable1. More information and registration link below! 📆 22 October 2024 🕰️ 16:00 CEST 🔗 https://loom.ly/DVhs6Is #ClimateChange #ClimateEconomics