IMF: Climate crisis is driving the world toward economic meltdown
Kristalina Georgieva, the managing director of International Monetary Fund, warned Friday at a speech at the Peterson Institute for International Economics that rising inequality and the climate crisis have the whole planet headed toward yet another financial disaster.
By Meteor Blades
Andrea Germanos at Common Dream writes—IMF Head Gives ‘Stark Message’ of Looming Inequality-Fueled Global Financial Disaster:
The trend of rising inequality within countries, [Georgieva] said, “is reminiscent of the early part of the 20th Century, when the twin forces of technology and integration led to the first Gilded Age, the Roaring Twenties, and, ultimately, financial disaster.”
Unlike the 1920s, however, the new decade is confronted with an urgent climate crisis.
“In the 2020s,” said Georgieva, “the financial sector will have to grapple with preventing the traditional type of crisis, and handle newer ones, including climate-related shocks. Think of how stranded assets can trigger unexpected loss. Some estimates suggest the potential costs of devaluing these assets range from $4 trillion to $20 trillion.”
She also pointed to new IMF research showing rising inequality—which her institution has helped fuel by promoting neoliberal policies—is a predictor of a coming financial crisis. Staving off that threat includes increasing affordable and readily available access to financial services to address inequality, sustaining regulatory mechanisms, and ensuring more stability. Key to the latter point is addressing the climate crisis.
“The financial sector can play a crucial role in moving the world to net zero carbon emissions and reach the targets of the Paris Agreement,” said Georgieva. “To get there, firms will need to better price climate change impacts in their loans.” Institutions will also increase stability and help lessen inequality by boosting lending to smaller firms, she added.
(Crossposted with DailyKos. Image by Sodahead.c)