The Real Mask Sickness, eh? » The Great Reset

The Great Reset

AUGUST 20, 2020
VICTORIA FORUM 2020



The Great Reset

Supporting the transition to a greener, smarter economy

 

Paul Beaudry

DEPUTY GOVERNOR

 

 


The pandemic, central banks and climate change

  • COVID-19 is a shock and an opportunity

  • Pivot to a greener, smarter economy?

  • Focus here on climate-related issues

  • Our contributions to scenario analysis

  • To start: how we view climate change risk


 

 


Two sets of risks from climate change

  • Physical risks: Damage or destruction caused by extreme weather/higher temperatures

  • Transition risks: Costs involved in the move toward a low-carbon economy

 


Different roles in facilitating a transition

  • Governments: setting environmental policy

  • Corporate sector: investing in technology

  • Households: shifting preferences/behaviour

  • Financial sector: financing transition

  • Central banks: smoothing the transition to

    1. ensure the financial system is up to challenge
    2. maintain economic activity close to capacity
    3. understand the potential economic effects

 


Scenario analysis: a useful tool given uncertainty

  • Scenario analysis describes plausible future pathways

  • It is not what will occur, but what could occur

  • Useful given the high degree of uncertainty related to:

    • climate change policy
    • technological development
    • evolving consumer and investor preferences

 


Scenario analysis framework

 

Scenario analysis framework
    •  

 

 


 

Delayed action leads to a disorderly adjustment

    •  

 


 

How to quantify macroeconomic and sectoral impacts?

 

  • Global oil production could fall sharply

  • Large structural shifts could occur across sectors
     

 

    •  

Looking ahead: scenario analysis and lessons of COVID-19

 

  • Scenario analysis as a journey

    • Multi-year process
    • Time to build in-house expertise and tools and to address data gaps
       
  • COVID-19 as a disrupter that offers new insights on climate change

    • An example of a structural shock with broad impact worldwide
    • If you knew 30 years ago that COVID-19 was coming, how would you prepare?
    • Preparation can reduce risks
    • Structural changes as we pivot to a greener, smarter economy
    • Opportunity to employ scenario analysis

Comments

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.