LETTER: Climate change will also damage financial systems
Besides technology, changing weather patterns will severely affect central banks
Reserve Bank deputy governor Daniel Mminele’s article on the challenges ahead for central banks (Greater challenges and scrutiny ahead for central banks, February 11) is an eloquent description of the role that central banks have played over the 10 years since the onset of the global financial crisis.
His concluding observation that the rapid economic changes in the coming decade are likely to result in central banks facing “more scrutiny than was historically the case and in some circumstances challenges to their mandate and independence” is not only correct, but puts us all on notice that central banks and policymakers are facing complex new challenges.
The inevitable corollary of Mminele’s argument is that central banks need to be more creative both in their approach to the challenges that they will face and in communicating about them with the public.
It is therefore disconcerting to note that the only challenge that Mminele mentions in his article is the change in financial technology. Over the next decade, the effect of climate change and the drive for a more inclusive and equitable financial system are likely to have at least as great an effect on central banking.
If, as the deputy governor maintains, the Bank needs to become more transparent, accountable and a better communicator, it would have been useful to at least learn how the Bank intends to deal with these two challenges.
Prof Daniel D Bradlow
University of Pretoria