Bank of Japan Gov Haruhiko Kuroda Photo: REUTERS file
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BOJ chief warns climate change among biggest challenges facing global economy

20 Comments

Bank of Japan Governor Haruhiko Kuroda said on Wednesday climate change is among the biggest challenges facing the global economy, joining a growing debate about how policymakers should address the growth risks posed by global warming.

Kuroda, former head of the Asian Development Bank, said some regions in Asia are particularly vulnerable to the economic consequences of natural disasters resulting from climate change.

"Climate change, how to realize a green economy ... These issues are really huge and I must say the most challenging issues faced by the global economy," Kuroda said in a virtual meeting of the U.S. National Association for Business Economics.

Central banks around the world have recently raised their awareness on the financial and economic risks posed by extreme weather, but the topic is rarely addressed by BOJ policymakers.

The global community must offer aid to smaller island economies vulnerable to rising sea levels, while striving to develop alternative energy and reduce greenhouse gas emissions, said Kuroda.

"These kinds of efforts are needed not only in developed economies, but developing and emerging economies," he said.

The financial sector must also step up efforts to make the banking system more robust and resilient to risks from climate change, Kuroda said.

In a report issued in January, the Bank for International Settlements warned of the potentially huge effects of climate change on the world's financial system.

The European Central Bank said last month it will from next year accept as collateral green bonds with payouts linked to sustainability targets.

The BOJ has in place a lending facility that offers cheap funds to commercial banks that extend loans to businesses with growth potential, including environmentally friendly projects.

But Kuroda has said the BOJ has no plans, for now, to buy green bonds - a category of fixed-income securities that raise capital for projects with environmental benefits.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

20 Comments
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Not so hard: population control. The historical chart of greenhouse gas emissions is the exact same curve of the world's population growth - a horizontal hockey stick. Countries need to actively encourage lower birthrates.

Renewables are good, but solar energy can't power blast furnaces.

-1 ( +4 / -5 )

Thanks to this crisis putting the skids into economic activity, UN Agenda 2030 is just a little closer. Just a few more lockdowns should do it.

-1 ( +3 / -4 )

Kuroda’s policies are much more dangerous than climate change..,

5 ( +9 / -4 )

That extraordinary much money printing over years now, and then blowing it completely into a whatever nothing seems to heat up the planet. Otherwise we would have it all still in our purses...lol

-1 ( +3 / -4 )

I thought that unemployment is the biggest challenge but apparently people doesn't have to work instead we will fight global warming.

-4 ( +2 / -6 )

Global warming? Think the BOJ and government are a bigger danger, old men stuck In the 80s trying to get to the 30s. But the idea that a 70+ old man knows best seems to persist againt all logic.

-1 ( +3 / -4 )

Kuroda’s policies are much more dangerous than climate change..,

Care to explain why and how?

-1 ( +1 / -2 )

LOL "Climate Change" is a money-grab. FFS

-3 ( +2 / -5 )

Toothless pronouncements by Kuroda. Utilize the QE spigot that only benefits financial interests and rentier capital and ballooning inequality that is a driver of environmental destruction to subsidize the development of alternative sources of energy.

-2 ( +0 / -2 )

Ah, once touted as an “economic genius”, Kuroda, when not vowing to do the things he vowed to start doing 8 years ago, spends his time and our taxes ‘predicting’ what’s been fact for months. Well done!

6 ( +6 / -0 )

But the idea that a 70+ old man knows best seems to persist againt all logic.

Sigh. Yes, yes, yes, hire the young while they still know everything. Right? Did it ever dawn on you that someone of that age has decades of accumulated research and real life experience to draw on when making decisions? Where I work when you have a technical problem that has you completely beat, you take the problem to one of the old gray beards who've been there and done that oh so many times for their opinion. Often your brain wracking problem has a pretty straightforward answer that isn't obvious unless, like the old Yoda-like graybeard, you have encountered it before. As I like to say, age and treachery overcomes youth and strength!

As for Japan's long term deflation combined with population decline, this is not something economics, my specialty, has a good answer to. It is a real hole in the knowledge of economists. Ordinarily the short term solution to a deflation is to inflate the economy with fiscal stimulus. Growth should return in time. That hasn't happened in Japan as its population also declines. If you have a solution to the problem that actually works there is undoubtedly a Nobel Prize waiting for you. You're young. You can do it. Right? Lol.

0 ( +2 / -2 )

BOJ chief warns

how to translate this into everyday politics?

0 ( +0 / -0 )

I think he should be focusing more up the Economic Climate, caused by the current COVID crisis...and of similar to come, rather than Global Warming, etc.

The former is clearly obvious through successive Government mismanagements Globally, resulting in "Shutdowns" and hefty hits to their respective Economies. The latter, however, has a wide spectrum of impacts which may or may not have an immediately obvious impact to the Global Economies.

The former, can clearly wipe out all life on earth, and therefore result in the latter being inconsequential.

-4 ( +0 / -4 )

That ship sailed a long time ago.

-1 ( +1 / -2 )

How did the Earth manage to survive all these years without politicians saving us from "global warmimg"? Please... Al Gore... save us... lol

-5 ( +0 / -5 )

It is a real hole in the knowledge of economists.

I'd call that an exaggeration. In the wake the bubble popping, Japanese employers cut workers' wages year after year for many years. Big companies, small companies, all companies. The workers got used to it. That's where the roots of the "deflationary mindset" lie.

Then you have globalization, aka "a race to the bottom" for mature economies. Then there's technology, bringing down the cost of information. Then there's the consumption tax hike, at a time when the 2% target was just coming into view.

Put it all together, and hello deflation!

0 ( +0 / -0 )

That ship sailed a long time ago.

And in the not so distant future when the Greenland ice cap melts that ship will be able to dock in Beijing. Look at some maps of where coastlines will lie when the seas rise 8-10 meters. It's going to happen and in our children's lifetimes. Shanghai and Tokyo are mostly submerged. Beijing will be a port city. So will Fresno. Florida mostly disappears. That is what the BoJ is referring to.

0 ( +1 / -1 )

How did the Earth manage to survive all these years without politicians saving us from "global warmimg"? Please... Al Gore... save us... lol

The laugh is on you. The Earth will still exist but it's surface is going to be very different as glaciers in places like Greenland melt and raise sea levels. It's happening now and is measurable so don't say it's a hoax. The melting of the ice on Greenland will raise ocean levels 8 - 10 meters. That submerges a lot of very big coastal cities, places like Jakarta, Singapore, Shanghai, Tokyo, Sacramento (some won't cry about that perhaps) most of Florida, ect. Places like Fresno, Palm Springs and Beijing become seaports. The economic dislocation is huge.

0 ( +1 / -1 )

Most major sources of emission has taken a massive dive due to covid, why is no one commenting on that?

On the other hand, at the last climate conference, all the 'stakeholders' want to talk about was the carbon credits certificates. The planet wasn't even on the agenda. ALL the talks was on carbon credits and how to trade, how to devalue old certificates (make them worthless) and how to buy expensive new ones to 'save the planet'.

Sigh...what a scam.

0 ( +1 / -1 )

On the other hand, at the last climate conference, all the 'stakeholders' want to talk about was the carbon credits certificates. The planet wasn't even on the agenda. ALL the talks was on carbon credits and how to trade, how to devalue old certificates (make them worthless) and how to buy expensive new ones to 'save the planet'.

Sigh...what a scam.

It's not a scam at all. When the idea was first developed circa 1980 it was called "pay to pollute". The idea originated with a pair of conservative but outdoorsy Reagan Administration lawyers, John B. Henry and C. Boyden Gray, who were vexed by the effects of pollution they saw while hiking in the Appalachians. At the time there were intense battles over what level of technology to force companies to use to clean up their smoke stacks, with arcane debates over Best Possible Technology vs Best Practical Technology, their costs and effectiveness. Being market oriented conservatives the two lawyers wanted a more market oriented approach that somehow priced pollution into the costs of production. The market failure that allows pollution to persist is that pollution is what us nerdy economists call a "negative externality". Pollution is a cost of production like labor and capital, but it is not priced into the product or service the production of which generates the pollution. The parties who pay that cost are those who are forced to suffer the deleterious effects of the pollution. Effectively those who suffer the effects of pollution subsidize the production of the polluting good or service. That is how it works in economic terms, it is just like a taxpayer subsidy. Since the price of pollution is not reflected in the price of good or service causing the pollution, that good or service is underpriced and thus more is sold that would be if the price of pollution was incorporated into the price of the product. The idea of selling pollution credits was to try to create a market price for pollution so the buyers of a product or service have to pay some of the cost of that pollution, or as economists would say, "internalize the cost", or even better companies would invest in research and new equipment to reduce that pollution and thus reduce their cost of production. In this manner firms would be motivated to reduce pollution if the price of pollution was incorporated into their product. Alternatively if it was less costly for them they could pay to clean up some other firms process to achieve equal pollution reduction required of them. Economists love stuff like this but back then environmentalist were aghast at the idea and opposed it strenuously. It took over 30 years for economists and some in business to bring environmentalists along with the idea. Now the very party from which the idea originated condemns it. Truth is often stranger than fiction and this is one such instance.

0 ( +0 / -0 )

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