Remarks by OFR Acting Director James Martin at OFR’s Conference of Climate-related Risks and Financial Stability
Published: September 9, 2022
As prepared for delivery
WASHINGTON – Thank you, Dasol. It’s good to be with everyone today. As Acting Director of the Office of Financial Research, I’m delighted to welcome you to OFR’s conference on Climate-related Risks and Financial Stability. Thank you Under Secretary Liang, and thanks to our panelists for taking time out of your busy schedules to share your insights with us. And a warm welcome to the 500 plus attendees. I hope you find value in the time you spend with us today.
As you may have experienced, climate risk is complicated to define and its potential risk to the financial system is challenging to model and forecast. Producing high-quality research on these risks requires access to both climate and financial data, as well as the ability to integrate these data. The integration can be complicated since it requires high-powered computing to ingest large, often complex data sets, as well as advanced statistical software to merge these data. While anecdotally we’ve heard this integration is a challenge for many researchers, we know firsthand that it is something financial regulators struggle with. The purpose of this conference is to examine these issues in our panel discussions and to showcase research that overcomes these challenges and deepens our understanding of the role climate risks play in the stability of our financial system.
To this point, I’d like to focus my remarks today on how the OFR is helping to address this challenge.
Earlier this year, the OFR partnered with our colleagues at the Federal Reserve Board to pilot a collaboration space that is equipped with data, high-powered computing, and analytic tools. This project is aptly named the Data Hub, or Hub for short. While the OFR is excited to pilot the use of the Hub for climate-related financial research, it isn’t designed to be climate specific, and down the road the Hub can be used as a data and analytic tool for other financial stability concerns.
For now, the Hub provides select staff from the OFR and the Federal Reserve System access to climate data – such as figures on precipitation, and crop and atmospheric conditions – and provides the tools needed to merge this data with their supervisory financial data. The Hub is also equipped with applications for users to collaborate on their research and share their findings. Looking ahead, we hope to expand the Hub for use by other FSOC regulators.
While it is difficult to predict the exact impacts of climate change on the financial system, we do know that climate change is an emerging and increasing threat to the financial stability of the United States. Being able to accurately assess this threat is an important first step towards mitigating it.
With that, I want to introduce you to someone else on the forefront of addressing risks to financial stability from climate change: Nellie Liang is the Treasury Department’s Under Secretary for Domestic Finance, a position to which she was confirmed on July 15, 2021. Before joining the Treasury Department, she was a Senior Fellow in Economic Studies at the Brookings Institution.
Under Secretary Liang has also been a visiting scholar at the International Monetary Fund’s Monetary and Capital Markets Department, a lecturer at the Yale School of Management, and a member of the Congressional Budget Office’s Panel of Economic Advisors.
Under Secretary Liang also held a variety of positions in her more than three-decade tenure at the Board of Governors of the Federal Reserve System, including the first Director of the Division of Financial Stability. In that position, Under Secretary Liang oversaw the development of financial stability policies related to risk in financial firms and financial markets and interactions of financial policies with monetary policies.
Under Secretary Liang received a doctorate in economics from the University of Maryland and a bachelor’s in economics from the University of Notre Dame.
We couldn’t be happier to welcome her to the conference.
Welcome Under Secretary Liang.