SAO PAULO, 1September 5 (Hfrance.fr) - Brazil's central bank on Wednesday announced new rules requiring banks to include climate change risks, such as droughts, floods and forest fires in their stress tests, to from July 2022.
Central bank director Otavio Damaso said the new regulation aims to avoid potential financial instability resulting from associated risks to the climate. However, for now, the central bank will not need additional capital to cover potential climate change risks, leaving that decision to the banks.
The move places Brazil's central bank for the company among the growing ranks of financial regulators demanding climate-related measures from banks. A few countries, including France and the Netherlands, have already launched int stress teststhe risks associated with climate change, and many more are in the works, according to the Financial Stability Institute. learn more
Brazil's central bank does not prohibit lenders from making loans, but climate change risk analysis could make the lines more expensive credit for some companies and sectors if the banks deem it necessary to allocate more capital to assume the risks they have identified.
In April 2022, the regulator plans to launch its own stress tests for the risks associated with climate change, integrating all banks according to the same risk criteria.
The regulator has also made it compulsory for banks to
The central bank also announced rules forbidding rural lending to projects on indigenous lands or in certain areas of the Amazon biome. However, he delayed the creation of a "sustainable loan " stamp for projects that follow best environmental practices.
central bank Claudio Filgueiras said the regulator is still discussing this framework with the agribusiness sector, which has criticized the proposed rules. In comments sent to the central bank in May, some lobby groups said regulation could hurt vital funding. Carolina Mandl Report Edited by Jane Merriman, Brad Haynes and Chris Reese
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