The building of the NBH in Budapest – Photo: wikimedia

Virag: New approach by central banks needed for green transition

The green transition is one of the greatest challenges in the world while also providing its greatest opportunities, but central banks must take a new approach to ensure its success, the deputy governor of the National Bank of Hungary said in London on Monday.

The NBH cited Barnabas Virag as telling a conference of the Network for Greening the Financial System (NGFS) that putting economies on a sustainable footing could no longer wait, an major investments were needed for the success of the transition to sustainability.

Central banks as institutions shaping the global financial system must integrate aspects of environmental sustainability, he argued, adding that global warming put upward pressure on inflation, undermined the predictability of the economic environment and caused serious social harm, he added.

Virag said the unpredictability of the climate impacted corporate profitability, and he highlighted the financial system’s vulnerability to the climate.

“Speeding up the transition to a sustainable economic model is an obligation we have to future generations,” he said.

“All international assessments show that the National Bank of Hungary is in the forefront globally in terms of incorporating an approach to sustainability in the central bank’s operations, and we will keep it this way,” he added.

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