Which of the following is a feature of the 'Climate-Related Financial Risks' discussion in central banking?
A.Physical and transition risks associated with climate change can affect the stability of the financial system and the transmission of monetary policy
B.Climate change is completely irrelevant for financial stability
C.Central banks have no role in assessing climate risks
D.Only physical risks matter and transition risks are irrelevant
Explanation:
Climate-related financial risks comprise physical risks (damage from extreme weather) and transition risks (losses from the adjustment to a low-carbon economy); both can impair financial institutions and the broader financial system.
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