Categories
Analysis Ecological Justice Economic Justice Financial Justice Social Justice

Climate Change, Social Justice Stalk World’s Central Banks

Whether from capitalist or socialist perspectives, many central banks and a growing number of governors recognize mounting ecological risks and, thus, the danger of economic collapse.

| Steve Clark |

Today’s global crisis has two major dimensions. 

On the one hand, exponential population growth, massive industrial expansion, and surging waste in our atmosphere (over the past century and a half) have forged an ecological catastrophe of existential proportions.

On the other hand, exploitation of “Global South” nations, extreme wealth polarization in every nation and worldwide, and persistent ethnic, racial, religious, gender and settler injustice have created a social catastrophe that stands between civilization and any effort to tackle this ecological reckoning. 

Extinction Rebellion, Sunrise Movement and others bear witness to impending ecological collapse, saying we have only a decade to make amends. Otherwise, civilization as we know it will go the way of the Roman empire and others that, in their times, outgrew and overwhelmed Nature and suffered centuries-long dark ages in their eventual collapse.

Despite decades of inattention and little leadership from most nations’ politicians, certain other key entities are considering or making adjustments. 

Among these are central banks (CBs). Whether from capitalist or socialist perspectives, many CB analysts and staffers and a growing number of governors recognize mounting ecological risks and, thus, the danger of economic collapse. They see the need to be proactive. 

Few central bankers, however, seem to appreciate the social justice necessary for a true ecological renaissance. No doubt, this shortcoming reflects the primary goal of western bank systems, maximizing private bank profit. 

The IMF, BIS and World Bank are run by the world’s central bankers, each voting according to the size of its economy. Of course, the US dominates. But, the matter of how to ensure adequate investment credit for the Global South — made even more apparent by the inequities of the current pandemic — is on the table but vexing for the financial elite. Despite rhetoric about a global climate crisis, most central bankers still find more ready focus in domestic concerns.

Below are some recent links with excerpts from various central bank climate commentators.

Yellen and Powell

Current Treasury Secretary Janet Yellen — the former Federal Reserve Chair (under Obama) — says, “President Biden has outlined an ambitious strategy to transition the United States to net-zero emissions and has mobilized the entire government to achieve it. At Treasury, our goal is to take this ‘whole-of-government’ approach and turn it into a ‘whole-of-economy’ approach”. Current Chair Jerome Powell, despite Republican criticism, also is on-board.

2018 – “A GREEN BANK OF ENGLAND” INTERNET POSTING

“The Bank of England is uniquely placed to explain the links and trade-offs between the low-carbon transition and other economic objectives, and to promote both where possible. It can retain its operational independence over monetary and financial policy even if the goals or parameters of policy are altered. Indeed, the choice of those goals is fundamentally a political question: political reform has modified the Bank’s purpose to suit historical and economic context in the past. The climate crisis presents an urgent change in context. The UK needs a central bank with a mandate which reflects that” 

How Debt and Climate Change Pose ‘Systemic Risk’ to World Economy

“The combination of debt, climate change and environmental degradation ‘represents a systemic risk to the global economy that may trigger a cycle that depresses revenues, increases spending and exacerbates climate and nature vulnerabilities,’ according to a new assessment by the World Bank, International Monetary Fund and others, which was seen by The Times. It comes after months of pressure from academics and advocates for lenders to address this problem.

“’We cannot walk head on, eyes wide open, into a debt crisis that is foreseeable and preventable,’ the United Nations Secretary General, António Guterres, said last week as he called for debt relief for a broad range of countries. ‘Many developing countries face financing constraints that mean they cannot invest in recovery and resilience.’”

The Changing Climate of Central Banking

“Finally, even monetary policy itself has begun to align with climate issues. Late last year, Sweden’s Riksbank announced a new climate-related exclusion policy. Similarly, the BOE (Bank of England) is expected to indicate later this year how it will account for the climate impact of its corporate-bond holdings. Several ECB (European Central Bank) decision-makers have called for climate risks to be incorporated into corporate bond purchases and collateral policy. And the NGFS (Network for Greening the Financial System) has just published technical guidance for “adapting central bank operations to a hotter world.” 

IMF, World Bank must support developing countries’ recovery 

“Most developing countries cannot do more due to financing constraints. As public spending needs shoot up, the pandemic has significantly cut their revenue. Recent IMF research found ‘larger output losses are experienced by countries with lower GDP per capita,’ partly due to ‘lower fiscal stimulus.’

“With limited tax and other revenue, developing countries will need to borrow more, increasing their already high public debt. As the IMF notes, ‘The international community [needs] to provide additional support through grants, concessional financing, and, in some cases, debt relief.’” 

Central Banks should turn green

“In a sign of how far things have come, this week the Network for Greening the Financial System, which includes the world’s major central banks, published a ‘toolkit’ of ways monetary policy institutions can address climate change in their operations.

“As Klaas Knot, president of the Dutch central bank, told an FT (Financial Times) climate conference last week, ‘We shouldn’t be tempted to think that we are the primary actors here. The primary actors are really the governments.’ Central banks should follow, but first it is the job of democratically elected governments to lead.” 

One reply on “Climate Change, Social Justice Stalk World’s Central Banks”

The most dangerous and likely the most imminent will be the collapse of western style democracy, as the combination of mass migration, stagnating economies, and the forces of nature will create a load too heavy to carry. Racism will force the doors open and then the cries for order will drown out ‘democrats.

How we hold back fascism is the question of the day!

Leave a Reply