The US Federal Reserve announces its withdrawal from an international climate change initiative

The US Federal Reserve announced its withdrawal from an international initiative on climate change, just days before Republican President-elect Donald Trump took office.
The Federal Reserve joined the network of central banks and supervisory bodies to prepare the financial system in December 2020.

Environmental and climate risks

It was praised at the time as a place to exchange ideas on developing financial sector policies to manage environmental and climate risks.
This network currently includes more than 100 major central banks and regulators from more than 90 countries, including the People’s Bank of China and the European Central Bank.
The Federal Reserve announced in a statement its withdrawal from the group because it “has increasingly expanded its scope, covering a broader range of issues that fall outside the scope of the Council’s legal mandate.”

The reserve has a dual mandate from Congress to act independently to address inflation and employment, and also bears responsibilities for regulating and supervising banks in the United States.

Addressing climate change

Federal Reserve officials expressed alarm at demands from lawmakers and activists that the bank play a greater role in addressing climate change, a politically charged topic in the United States.
“Federal Reserve policymakers are often pressed to take a position on issues that are relevant to the economy but do not fall within our mandate,” Fed Chairman Jerome Powell said at a conference in California in early 2024.
“Policies to address climate change are the responsibility of elected officials and the agencies to whom they have entrusted that responsibility,” he stressed, adding, “The Federal Reserve has delegated no such responsibility.”