The Central Bank of Egypt (Photo: Al-Ahram)
The workshop is part of a technical cooperation scheme funded by the UK government, through which the Bank of England staff will share UK experience on analysing, managing and understanding the effects of climate change on financial firms and the stability of the financial system.
It will also draw on the work of the Network for Greening the Financial System (NGFS) which brings together 116 central banks and financial supervisors from across the globe, including the CBE, to develop recommendations and share best practices in the fight against climate change.
Sarah Breeden, who leads the Bank of England's work on climate change and has been an NGFS Steering Group member since its inception in 2017, will open the event.
In May, the Bank of England released the results from its Climate Biennial Exploratory Scenario (CBES), which explores the financial risks posed by climate change for the largest banks and insurers operating in the UK.
Part of the workshop will involve sharing key findings and insights from the exercise, allowing the CBE to gain a better understanding of how climate risks are being managed elsewhere.
“I am delighted to see this latest stage in our climate cooperation with Egypt, as our central banks meet to discuss how to tackle the economic effects of climate change. This is a vital part of the conversation. If we are to deliver on the commitments agreed at COP26 as part of the Glasgow Climate Pact, we need to consider smart and creative responses to the financial risks posed by the changing climate. The Bank of England has world-leading expertise in this area, and I am proud that we are working with our Egyptian partners to share our experience and help deliver a successful COP27,” said Gareth Bayley, the British ambassador to Egypt.
For her part, May Abulnaga, first sub-governor at the CBE, said that climate change is one of the most prominent areas of sustainable finance.
She noted that it has brought about new types of risks that should be accounted for, adding that transition to lower carbon economies needs to be gradual and well informed to ensure financial and banking stability, as banks will have an active role in facilitating this transition.
“The Bank of England is a pioneer in climate finance and has continuously provided support to the Central Bank of Egypt in building its capacity to address these risks. We look forward to our future cooperation towards developing more sustainable economies,” stated Abulnaga.
“Challenges posed by climate change are very significant, and if we are to address them successfully we will need to share expertise across institutions. This Climate Scenario Analysis Workshop we are carrying out is a practical example of the international cooperation needed. Bank of England staff have been heavily engaged in scenario analysis, modelling the financial risks that arise from these and embedding climate change into our supervisory approach. We look forward to sharing some of our expertise with our partners at the Central Bank of Egypt,” according to Sarah Breeden, Executive Director for Financial Stability Strategy and Risk at the Bank of England.