Top UK banker warns of the risks of rapidly shifting away from fossil fuels

Top UK banker warns of the risks of rapidly shifting away from fossil fuels

Mark Carney, head of the Bank of England, has said a move to a low carbon economy, that is too quick, could damage the financial stability of the UK.

According to Carney, a sudden redirection of funding away from the oil and gas sector, coastal real estate, amongst others could have severe financial implications to the markets.

He said: “Too rapid a movement toward a low-carbon economy could materially damage financial stability.”

In a speech, Carney referred to the work of Hyman Minsky, who is known for theorising the “financial-instability hypothesis”, which suggested long periods of economic prosperity when people acquire wealth and debt would result in a financial calamity – as seen in the 2008 financial crash.

Carney said: “A wholesale reassessment of prospects, as climate-related risks are re-evaluated, could destabilise markets, spark a pro-cyclical crystallisation of losses and lead to a persistent tightening of financial conditions: a climate Minsky moment.”

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