The Role of Macro-Finance in Climate Change
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Rodrigo Valdés, Director of the Western Hemisphere Department of the International Monetary Fund.
Background
Financial markets, with their transformative potential, are instrumental in mitigating climate change. They mobilise and direct resources towards low-carbon technologies, a crucial step in our collective efforts to combat climate change. The literature identifies two primary policy types: climate risk-focused policies and climate finance-promoting policies.
Climate risk-focused tools, with their effectiveness, aim to address financial institutions' failure to account for climate risks. These tools not only help mitigate climate change but also influence the demand and pricing of green and carbon-intensive investments, thereby steering financial markets towards a more sustainable future.
On the monetary policy side, central banks can develop climate risk assessments and ensure these risks are incorporated into their collateral frameworks and asset portfolios. Financial policy tools include reserve, liquidity, capital requirements, loan-to-value ratios, caps on credit growth, climate-related stress tests, disclosure requirements, enhanced climate risk assessments through financial data dissemination, corporate governance reforms, and developing a standardised taxonomy for green assets.
Climate finance-promoting policies aim to account for mitigation efforts' externalities and societal benefits. These policies recognise that economic activities can harm the environment and create social value, such as reduced air pollution and faster technological progress. These policies can significantly mitigate climate change by shifting relative prices and boosting investments. However, their incorporation into existing policies can be controversial due to the addition of new objectives.
Practical details
This is the second in a new series of webinars from our UNESCO Chair on Science, Technology and Innovation for Sustainable Development for Latin America. The format will be a 45 minute presentation followed by 15 minutes for Q&A. Our intended audiences are scholars and PhD students, but all are welcome to join!
Date: Tuesday 21 May 2024
Time: 15:00 - 16:00 CEST
Click here for the Zoom link to join the event.
About the speaker and discussant:
Rodrigo Valdés is a Chilean economist and has been the Director of the Western Hemisphere Department at the IMF since May 2023. Prior to joining the Fund, he served as a Professor of Economics at the Catholic University of Chile and held board positions in various private sector companies. Previously, he served as Chile's Minister of Finance from 2015 to 2017. Throughout his career, Mr. Valdés has held prominent roles at the Ministry of Finance and the Central Bank, including Director of Research and Chief Economist. Additionally, he has served as Deputy Director of the IMF’s Western Hemisphere Department (where he also was mission chief for the US) and European Department. Mr. Valdés has significant experience in the banking sector, having been the President of the Board and Executive Committee at Banco Estado, Chile’s sole state-owned bank. He has also worked as Director and Chief Economist for Latin America at Barclays Capital and as Chief Economist (Latin America ex-Brazil) at investment bank BTG Pactual. Mr. Valdés earned a PhD in Economics from MIT and a BA in Economics from the University of Chile. His contributions extend to publishing numerous academic and policy papers on monetary and fiscal policies, as well as on international finance.
Prof. Dr. Anthony Bartzokas is a Professorial Fellow at UNU-MERIT, Visiting Professor in Practice at the LSE and Associate Professor at the University of Athens with extensive experience in academia, policy relevant research and development finance. He has worked on financial systems, corporate investment, and innovation dynamics combined with real-life exposure to investment decisions and financial markets during his tenure as executive board director at the European Bank for Reconstruction and Development.
His current research focus is on finance and innovation and is motivated by the erosion and the differential impact of global public goods, the prominent role of financial structures in innovation dynamics, and the value added of policy relevant research for long term investment decisions.
At UNU-MERIT he is pursuing research on (a) the diffusion of financial innovations and development finance institutions, and (b) post COVID recovery and innovation financing. Also, he is actively involved in policy networking with the UN system, financial institutions and policy makers on Innovation and Finance for Sustainability in the framework of the Comprehensive Innovation agenda.
His conviction is that the challenges arising from financial constraints and investment capacity gaps in “building back better” call for interdisciplinary research, capacity building and better integration between scholars of innovation, policy makers and the private sector.
Venue: Online (Zoom)
Date: 21 May 2024
Time: 15:00 - 16:00 CEST