ECB warns climate crisis threatens core financial stability

European Central Bank executive board member Frank Elderson warned that the climate emergency and the rapid loss of ecosystem services pose a dramatically growing risk to the global economy and to financial stability. He said that the destruction of nature‑related processes that underpin human activity can directly affect credit risk, growth, inflation and long‑term financial stability.

Elderson cited the record‑breaking heat and wildfires in France and Spain, which have burned large areas of land, businesses and homes, creating heavy economic costs. In response, the ECB is expanding its monitoring of nature‑related risks and has launched a programme to assess how ecosystem degradation could translate into credit‑loss dynamics for euro‑area banks, with a detailed analysis due later this year.