Regulatory Alerts2023-04-21
Added · Updated
Guidelines for Banking Sector Climate Risk Stress Test
The Hong Kong Monetary Authority issued these guidelines to enhance the Climate Risk Stress Test framework for authorized institutions, integrating the exercise into its supervisor-driven stress testing cycle from June 2023 to June 2024. The document mandates that banks assess their resilience using a short-term scenario combining climate shocks with a macroeconomic downturn, alongside three long-term scenarios based on NGFS pathways. Participating institutions are required to apply static balance sheet assumptions, conduct granular sectoral impact analyses, and adhere to detailed reporting standards to quantify tail risks under extreme emission pathways.
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