The Federal Reserve withdrew from a network of global financial regulators focused on climate change risks days before President-elect Donald J. Trump returned to power.
The central bank announced its formal participation in the network in December 2020, shortly after President Biden’s election. The decision drew praise from Democrats, but skepticism from Republicans, who feared that increased focus on climate change risks by financial regulators could have a negative impact on U.S. bank customers. It went up.
The group, known as the Network of Central Banks and Supervisors for Greening the Financial System, will assist central banks and other regulators in considering how to address climate-related risks in the financial sector. It exists to support the exchange of ideas and research. The network also aims to “mobilize mainstream finance to support the transition to a sustainable economy.”
Fed officials said the decision to leave the network came after the group’s activities expanded.
“While the Board has valued the NGFS and its engagement with its members, the scope of the NGFS’ activities is increasingly broadening to cover a wider range of issues that are outside the scope of the Board’s statutory authority.” said. statement on friday.
The network did not respond to a request for comment.
Five members of the Federal Reserve Board voted to withdraw Participants from networks including Federal Reserve Chairman Jerome H. Powell; Two commissioners abstained, including Adriana Kugler and Michael Barr, who recently announced he would step down as vice chair for oversight by Feb. 28.
The central bank’s move to join the network was seen as a recognition that the Fed needs to start considering the impact of extreme weather events as they occur more frequently and pose greater risks to the financial system. The Fed had been informally part of the network for more than a year before officially joining.
Days before the Fed officially joined, a group of Republican lawmakers expressed skepticism about the Fed’s involvement in the network. The recommendations “could significantly limit access to capital for critical industries and impose harmful restrictions on regulated entities,” the Republican lawmakers wrote. letter addressed to Federal Reserve officials in December 2020.
