Potential increase of capital requirements by the ECB

According to the website, Green Central Banking, a member of the European Central Bank (ECB) stated that banks’ transition plan targets and capital rules need to be linked. This entails:

  • Banks to publicly disclose their transition plans 
  • Consequently, if a bank is not aligned with an envisioned plan, then it would translate into higher transitional risk and a capital add-on 
  • As per the website, the ECB has previously mentioned that the current capital requirements do not necessarily reflect climate-related financial risk 

To read more, visit: