Central banks see climate risk as potential financial instability risk and therefore as coming under their financial stability mandate.

Central banks see climate risk as potential financial instability risk and therefore as coming under their financial stability mandate. a. Explain how climate risk can cause financial instability according to central banks. b. Discuss whether central banks can be successful in preventing climate risk related financial instability when financialisation dominates corporate behaviour and can cause green bubbles in financial markets. You should answer the questions above in maximum 750 words by using the insights from the following course readings. The first three readings relate to the Question 1.a and the remaining three readings relate to the Question 1.b. 1. Borio et al. (2022) “Finance and climate change risk: managing expectations”, https://www.bis.org/speeches/sp220607.pdf 2. NGFS (2019) A call for action: Climate change as a source of financial risk, (pages 4-19 only) https://www.ngfs.net/sites/default/files/medias/documents/ngfs_first_comprehensive_report_-_17042019_0.pdf 3. Nauman, B. (2021) “’Green bubble’ warnings grow as money pours into renewable stocks”, https://www.ft.com/content/0a3d0af8-7092-44c3-9c98-a513a22629be 4. Christophers, B. (2017) “Climate Change and Financial Instability: Risk Disclosure and the Problematics of Neoliberal Governance”, Annals of the American Association of Geographers, 107(5), pp. 1108-1127 5. Ertürk, I. (2020) “Shareholder Primacy and Corporate Financialization” in Mader P., Mertens, D. and van der Zwan, N. (2020) International Handbook of Financialization, Routledge, Oxon, London 6. Ertürk, I. (2024) “Money and Green Economy: financialised solutions to the environmental problems” in Jager, J. and Dziwok, E. (2024) Understanding green finance: a critical assessment, Edward Elgar Publishing.