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Stranded assets and the financial system

Andreas A. Papandreou ()
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Andreas A. Papandreou: National and Kapodistrian University of Athens

No 272, Working Papers from Bank of Greece

Abstract: There has been a burgeoning interest and literature on the risks associated with stranded assets. This paper aims to present an overview of this literature with a focus on the risks to the financial system associated with stranded assets and why these risks need to be a concern to central banks. It considers various definitions of stranded assets and its expanding scope while focusing more narrowly on climate-related risks and how these affect the financial system. Two main channels of climate-related risks are discussed in depth: risks of physical impacts from climate change and risks associated with the transition to a low-carbon economy. Reasons why the financial system may inadequately account for these risks are presented along with corrective policies on the part of investors and central banks. The paper also considers the special challenges and threats to financial stability associated with the historically unique sustainability transition needed to achieve the targets set by the Paris Agreement.

Keywords: stranded assets; climate change; financial stability (search for similar items in EconPapers)
JEL-codes: G2 Q54 (search for similar items in EconPapers)
Pages: 56
Date: 2019-12
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-hme
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