The European Central Bank (ECB) has warned that climate change poses a risk to financial stability and could affect monetary policy.

”(It) is pretty obvious, climate change will have — has already — an impact on price stability, whether you look at climate related events, whether you look at particularly exposed areas, prices will be determined as a result of that,” European Central Bank President Christine Lagarde said remotely during the State of the Union conference, CNBC reports.

The ECB is undergoing a policy review of all aspects of its monetary policy, and climate change risks are also being considered in a report.

“The monetary policy space that is available will also be determined partly, not exclusively, but partly on climate change,” Lagarde said.

The central bank’s supervisory branch is also scrutinizing lenders in the region for how they are managing their climate-related risks.

“Although corporate asset…

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