ECCB Governor Says Climate Risk is Financial Risk

Governor of the Eastern Caribbean Central Bank, Timothy N. J. Antoine in his opening remarks at the ECCB@40 celebration on Wednesday, November 8, 2023, said Climate Risk is Financial Risk and an existential threat to the region.

This week, the ECCB is hosting government and financial leaders from across the region and around the world as it marks 40 years in service to the Eastern Caribbean Currency Union.

Governor Antoine said, “We are now at a stage that the United Nations Secretary-General, António Guterres, termed “an era of global boiling.” According to NASA scientists, July 2023 was the hottest month on record (0.24°C above any other July in NASA’s record) and 2023 is on pace to become the hottest year ever. On this current track, our planet now at 1.2 degrees Celsius (above pre-industrial) could exceed, in some years, 1.5 degrees Celsius before 2030.

“A 2018 IMF study found that in the Caribbean, the frequency of disasters is seven times higher than anywhere in the world and losses from these disasters are 6.5 times more than the global average.

“Indeed, our region faces wipeout events, as was the case in 2004 with Hurricane Ivan in Grenada (200% of GDP) and in 2017 with Hurricane Maria in Dominica (226% of GDP). Moreover, Caribbean countries experience annual losses to weather events of 2.5 per cent of GDP.

CCB Gov Antoine (screenshot)

“Ladies and gentlemen, we need a liveable planet, and climate change poses an existential threat. Consequently, without attempting to stoke culture wars —and in all seriousness—we have a stark choice between what some refer to as “woke” central banking and what I refer to as “smoked” central banking. For the preservation of financial stability, we simply cannot ignore climate risks. In this regard, we support the Bridgetown Initiative 2.0, which Prime Minister Mottley has championed to advance the interests of the Global South. To that end, we welcome the adoption of Climate Resilient Debt Clauses by the Inter-American Development Bank (IDB), International Monetary Fund (IMF), World Bank and Caribbean Development Bank (CDB), an innovation that was first pioneered in Grenada in 2014 and for which our region has strongly advocated for the past decade.

“While we agree with the necessity for disclosures and effective stress testing by licensees and regulators, these efforts are necessary but not sufficient. To meet this moment, significant climate capital is required for adaptation and loss and damage. In this regard, we call on our international partners to support the efforts of Emerging Market and Developing Economies (EMDEs) and Small Island Developing States (SIDS) to create green finance markets. To that end, we call for broad adoption of the Multidimensional Vulnerability Index (MVI) for determining access to grants and concessional financing, as opposed to the archaic reliance on GNI per capita, which is an analytical absurdity and is simply not fit for purpose,” Governor Antoine stated.

The ECCB is hosting the ECCB@40 Global Conference in collaboration with the Central Banking 2023 Autumn Meetings from November 8 to 10 under the theme Fit for the Times: Building Resilience and Embracing Innovation. The 5th Annual Conference with the ECCU’s Licensed Financial Institutions (LFIs) and the 2023 ECCU Bank of the Year Awards also took place during this period.

Watch Governor Timoth N. J. Antoine’s remarks here