French Climate Stress Tests for Financiers to Be Anonymous

(Bloomberg) --

Climate stress tests of the French financial sector will be published in aggregate and anonymously, the country’s central bank said Tuesday, echoing a design the Bank of England has suggested.

The Bank of France pledged in November it would submit banks and insurers to the new tests in 2020. It expects to define the different scenarios it will test by the end of March and complete the tests by December.

“The ambition of this exercise is double: better identify the resilience of banks and insurers to climate risks, and accelerate methodological work to have quality assessments,” Bank of France Governor Francois Villeroy de Galhau said in a speech to France’s financial sector Tuesday.

Central banks are trying to design stress tests as they increasingly view climate risks as financial risks, while at the same time not adding to uncertainty for the sector. The Bank of England said in December that it’s planned 2021 stress tests won’t have a pass or fail and the results would also be be aggregate to not point the finger at individual firms.

In his annual January address to the financial sector, Villeroy also warned banks that the central bank would be vigilant that they respect new recommendations in place since the start of the year on mortgage lending: “This means, in short, no more excesses, and a rapid change of behaviour. Otherwise, we might see a capital surcharge for non-compliant loans.”

©2020 Bloomberg L.P.

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