The Federal Reserve announced on Friday its decision to withdraw from an international coalition of central banks that focused on addressing climate change through financial regulation. The move comes amidst criticism from Republican lawmakers in Congress.
In a statement, the Fed expressed its appreciation for collaborating with the Network of Central Banks and Supervisors for Greening the Financial System. However, it cited the organization's expanding scope beyond the Fed's statutory mandate as the reason for its departure.
This decision is seen as part of the Fed's efforts to maintain its independence from political pressures, particularly in light of the incoming Trump administration. Earlier this month, a key Fed official involved in financial regulation announced his resignation, a move that was met with opposition from major banks.
The Fed's move to exit the network was influenced by criticisms from individuals like a top economic adviser to President-elect Donald Trump, who viewed the Fed's consideration of climate change in bank regulation as 'mission creep.'
The Fed had joined the NGFS in December 2020, following the election of President Joe Biden, making it one of the last major central banks to do so. With over 140 central banks and financial regulatory agencies as members, the network aims to address climate-related financial risks.
Some experts, however, have expressed concerns over the Fed's decision to withdraw, viewing participation in the network as a crucial step in addressing climate change within the financial sector. The majority of the Fed's governors voted in favor of leaving the network, including Chair Jerome Powell, while two governors abstained from the decision.
