Federal Reserve Exits Global Climate Risk Network Ahead of Trump’s Return to Power

The Federal Reserve has announced its withdrawal from a network of global financial regulators, the Network of Central Banks and Supervisors for Greening the Financial System, focused on climate risk. The move comes just days before Donald J. Trump assumes power once again.

The Federal Reserve had previously joined the network in December 2020, shortly after Joe Biden was elected. This decision was welcomed by Democrats, but raised concerns among Republicans, who feared that heightened focus on climate risk could adversely affect American bank customers.

Purpose of the Network

The Network of Central Banks and Supervisors for Greening the Financial System was established with the objective of facilitating the exchange of ideas and research among central banks and financial regulators. Its primary goal is to assist them in understanding and addressing climate-related risks in the financial sector. Furthermore, the network aims to mobilize mainstream finance to drive the transition toward a sustainable economy.

Reasons for Withdrawal

In its statement, the Federal Reserve explained that the decision to withdraw was prompted by the network's expanding scope, which had begun to encompass a wider range of issues beyond the Federal Reserve's mandate. This shift in focus led the Federal Reserve to reconsider its involvement in the network.