A Significance of Climate Risks for the financial Stability: What do Trends in Central Banks Communication Tell Us?

Abstract

The article examines to what extent central banks transmit the significance of climate risks for the financial stability to markets. Using simple text-mining techniques the article explores Financial Stability Reports (FSR) of central banks from the sample to assess the relative importance of climate- -related topics, in particular to assess an intensity and regularity of climate topics in FSRs as sub-factors of their importance. The author assumed that the great importance of climate topics in central banks communication, facilitated by their regularity, gives a strong signal to markets about the significance of climate risks for financial stability. However, the findings indicate the generally low importance of climate-related topics in central banks' communication (by means of FSR), which remains in contrast with the great urgency of climate considerations for financial stability nowadays.(author's abstract)(original abstract)