Central Bank Communication about Climate Change

June 2, 2022
Bank of Japan

The Board of Governors of the Federal Reserve System published a staff working paper entitled "Central Bank Communication about Climate Change" (written by David M. Arseneau,^*1 Alejandro Drexler,^*2 and Mitsuhiro Osada^*3).

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Abstract

This paper applies natural language processing to a large corpus of central bank speeches to identify those related to climate change. We analyze these speeches to better understand how central banks communicate about climate change. By all accounts, communication about climate change has accelerated sharply in recent years. The breadth of topics covered is wide, ranging from the impact of climate change on the economy to financial innovation, sustainable finance, monetary policy, and the central bank mandate. Financial stability concerns are touched upon, but macroprudential policy is rarely mentioned. Direct central bank action largely revolves around identifying and monitoring potential risks to the financial system. Finally, we find that central banks tend to use speculative language more frequently when talking about climate change relative to other topics.

1. *1Federal Reserve Board, Division of Financial Stability
   E-mail : david.m.arseneau@frb.gov
2. *2Federal Reserve Bank of Chicago, Economic Research Department
   E-mail : alejandro.h.drexler@chi.frb.org
3. *3Personnel and Corporate Affairs Department, Bank of Japan and Federal Reserve Board, Division of Financial Stability
   E-mail : mitsuhiro.osada@boj.or.jp / mitsuhiro.osada@frb.gov