Global banks warn climate change could trigger next global financial crisis
The Reserve Bank of Australia has been urged to 'mobilise all forces' to save the economy from a disaster induced by climate change. Photo / AP The Reserve Bank of Australia has been urged to "mobilise all forces" to save the economy from a disaster induced by climate change. The world's most powerful banks have issued a warning that climate change could trigger the next global financial crisis. In an expansive new report, the Bank of International Settlements (BIS) told its members they had to start including climate change in their thinking about the stability of the economy. The BIS, the Switzerland-based international body comprised of more than 50 of the world's most influential central banks, including Australia's Reserve Bank (RBA), warned the RBA could be forced into rescuing the economy and the environment. The RBA may have to buy up coal mines and fossil fuel power stations to reduce the economic impact. During the global financial crisis some central banks intervened to save private banks and insurance firms as part of a program to protect the economy. The BIS said this could be the template used in the case of climate change. "In the worst-case scenario, central banks may have to confront a situation where they are called upon by their local constituencies to intervene as climate rescuers of last resort," it said. The BIS warned that economic models mapping out possible climate change scenarios were "inherently incapable" of dealing with the many overlapping forces that would lead to a lower-emissions economy. "Fundamentally, climate-related risks will remain largely uninsurable or unable to be hedged as long as system-wide action is not taken," the BIS said. It urged central bankers to "be more proactive" in pushing governments on the transition to a greener economy, while also urging governments to steer financial institutions and businesses towards accounting for climate-related risks in their investment decisions. It comes as four of Australia's leading international aid organisations have urged the Morrison Government to take major climate change action amid the country's bushfire crisis. World Vision Australia, Oxfam Australia, Plan International Australia and Save the Children Australia have joined forces to issue a plea for stronger climate measures. The group wants more ambitious emission reduction targets to limit the global temperature rise to 1.5C, warning many countries will face unmanageable suffering and devastation if more isn't done. "The time for debate about climate change is over, it is now time for action. We cannot afford to waste any more time," it said in a statement on Tuesday. The organisations have called on Australia to demonstrate strong leadership on climate action and transition to a low-emissions global economy, support reforestation programs and build the capacity of vulnerable communities in Australia and overseas to deal with the ravages of climate change. The four charities have called for the Coalition government to sign the Intergovernmental Declaration on Children, Youth and Climate Action. "Our organisations acknowledge that this issue is so pressing, we must advocate in alliance to amplify the voices of the world's most vulnerable people," the joint statement says. The Australian arms of World Vision, Oxfam, Plan and Save the Children describe climate change as a human rights issue impacting on health and an adequate standard of living. "Every day, our aid workers see the very real and devastating impact of climate change on the world's most vulnerable people," the aid alliance says. The group pointed to a food crisis in southern African, severe floods in Indonesia and a 2018 deadly cyclone in Mozambique. "Now the climate emergency has well and truly arrived at home, too," the alliance continued. "Australians are suffering through the devastating ongoing fallout from our worst fire season on record, with dozens of lives, thousands of homes and more than a billion creatures lost. "Fires continue to rage and millions are breathing in hazardous air across three states." Climate action has been brought into sharp focus by Australia's deadly bushfires with the issue sparking tensions within the coalition. OPINION: Momentum is on the rise, but plenty more to do.