Press conference exchange between CHRISTOPHER RUGABER and Fed Chair Jerome Powell:

user: Hi, thank you. Yesterday, I guess, the Fed said that it is joining the international financial greening group. And I just wanted to see if you could expand on how the Fed is thinking about climate change and how it might affect Fed policy going forward. Specifically, I think Janet Yellen drew a distinction between considering climate change when it comes to financial regulation. But how do you see that also potentially affecting monetary policy? Obviously, there have been criticisms of the Fed for buying bonds of oil and gas companies. But leaving that specific case aside, I mean, are there—is there any way that climate change considerations could affect monetary policy going forward?

assistant: So the—you’re, you’re talking about the—sorry, the Network of Central Banks and Supervisors for Greening the Financial System, which we joined this week. And I’ll just—I’ll just say a couple things about that. So, first, I’ll just start by saying that we’re going to move carefully and thoughtfully on developing an understanding of how climate change affects our work, including the areas you mentioned. We’re going to do so with a great deal of engagement with all of our external constituencies, including the public and their elected representatives who are charged with our oversight. We’ll do it with great transparency. Remember that we are a nonpolitical agency whose goals and authorities to achieve those goals are set by Congress. We have great responsibilities and strong authorities that we’ll use vigorously. We’re not the forum where all the great issues of the day are to be hashed out, debated, and addressed unless and only to the extent that those issues are directly relevant to our statutory goals and are addressable through our legal authorities. And because we have a narrow remit, and because we stick to it, Congress has given us a precious grant of independence from direct political control. So society’s broad response to climate change is for others to decide—in particular, elected leaders. But—so let me—let me get to your question. What does all that mean for an issue like climate change? And why did we join the NGFS? So Congress hasn’t explicitly assigned us or other financial regulators a role, and we’re not among the agencies who contribute to the National Climate Assessment—Climate Assessment, for example. But climate change is nonetheless relevant to our existing mandates under the law. And let me tell you why. One of our jobs is to regulate and supervise banks and to look after the stability of the financial system. That’s a responsibility we share with other agencies. The public will expect that we will—we will do that. So we’ll, we’ll expect that, that those important institutions will be resilient against the many resists—risks that they fake—face: credit risk, market risk, cyber risk. Climate change is an emerging risk to financial institutions, the financial system, and the economy. And we are, as so many others are, in the very early stages of understanding what that means, what needs to be done about it, and by whom. That’s why 83 central banks have joined together to share research and identify best practices in this important emerging area. We’ve been attending NGFS meetings as an observer for more than a year, taking part in the work. We had discussed that it was probably time to join as a member. I’ll just say that the financial system is really a global one. It’s important that we work and discuss best practices with peer agencies around the world, especially in a field where we’re just beginning to develop our, our understanding. You asked about monetary policy. You know, I—I’ll say this. We, we have historically shied away strongly from taking a role in credit allocation. In fact, our agreement with Treasury during the financial crisis from back in 2009 or ’10 says that we will avoid credit allocation. It’s something we’ve carefully avoided. So I, I would be very reluctant to see us move in that direction, picking one area as creditworthy and another not. So you asked about monetary policy. You know, it’s, it’s—for now, I would say the real—the real concern is—the real place to focus, for me, is supervision of financial institutions and then financial stability concerns. You can see a connection there. Monetary policy, maximum employment, stable prices—it’s less obvious to me. I can—I can, you know—I can make the argument, but it’s less obvious to me that those should be first-order things that we would look at in connection with climate change. But I think there’s—I think there’s work to be done to understand the connection between climate change and the strength and resilience of financial markets and financial institutions. I think that work is in its early days. And, again, we’ll be careful. We’ll be thorough and transparent and, and engage with the public on all that.