National Bank of Hungary: New approach by central banks needed for green transition

The green transition is one of the greatest challenges in the world while also providing its greatest opportunities, but central banks must take a new approach to ensure its success, the deputy governor of the National Bank of Hungary said in London on Monday.

The NBH cited Barnabás Virág as telling a conference of the Network for Greening the Financial System (NGFS) that putting economies on a sustainable footing could no longer wait and significant investments were needed for the success of the transition to sustainability.

Central banks, as institutions shaping the global financial system, must integrate aspects of environmental sustainability, he argued. Global warming, he added, puts upward pressure on inflation, undermines the predictability of the economic environment, and causes serious social harm.

Virág said the climate’s unpredictability impacted corporate profitability and highlighted the financial system’s vulnerability to it.

“Speeding up the transition to a sustainable economic model is an obligation to future generations,” he said.

“All international assessments show that the National Bank of Hungary is in the forefront globally in terms of incorporating an approach to sustainability in the central bank’s operations, and we will keep it this way,” he added.

As we wrote last week, the Hungarian central bank has put on the brakes, details HERE.