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Bank of Canada identifies climate change as important economic weak spot

The Bank of Canada in Ottawa is seen on Thursday, May 16, 2019. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA — The Bank of Canada is highlighting its growing concerns about the challenges of climate change for the economy and the financial system.

For the first time, the central bank’s financial system health report is flagging climate change as an important vulnerability along with its long-running worries about household debt and apprehension about the housing market.

The assessment is part of the Bank of Canada’s annual report card that explores key weak spots and risks surrounding the stability of the financial system.

The bank says climate-change risks — including extreme weather events and the complex shift to a lower-carbon economy — is now being incorporated into its research.

The report says the transition to the greener economy will likely lead to difficult adjustments for carbon-intensive sectors, such as oil and gas, and could expose insurance companies, banks and asset managers to more risks.

In addition to climate change, the report is also underlining the emerging vulnerability of rising corporate debt levels, some of which is of a lower quality.

 

The Canadian Press

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