Regulatory Alerts2025-02-28
Added · Updated
Guidelines for Banking Sector Climate Risk Stress Test 2.0
The Hong Kong Monetary Authority conducted the second round of the Banking Sector Climate Risk Stress Test (CRST 2.0) involving 46 banks to assess the sector's resilience against physical and transition climate risks. The exercise utilized short-term scenarios combining economic downturns with climate shocks and long-term scenarios based on NGFS frameworks, revealing that the sector's capital adequacy remains well above minimum requirements despite projected drops. Participating banks demonstrated enhanced capabilities in model governance and data collection, prompting the HKMA to integrate climate risk assessments into its regular supervisor-driven stress testing framework.