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Climate Risk Scorecard

Assessment Key
Significant ProgressSignificant Progress
Some ProgressSome Progress
No ProgressNo Progress
Not ApplicableNot Applicable
About the Federal Reserve System

The Federal Reserve System (Federal Reserve or Fed) is the central bank of the United States and one of the largest central banks in the global financial system. The Fed is comprised of the Board of Governors and 12 regional banks, which are the operating arms of the Federal Reserve System. Each reserve bank operates within its own geographic area of the U.S., gathering data and other information about the businesses and the needs of local communities. That information is then factored into policy decisions by the Federal Open Market Committee (FOMC), which sets national monetary policy and makes all decisions regarding the conduct of open market operations, and the Federal Reserve’s Board of Governors, which oversees the reserve banks and ensures the Fed fulfills its statutory responsibilities. 

The Fed’s mission is to foster the stability, integrity, and efficiency of the nation’s monetary and financial systems, in order to maximize economic performance. It sets U.S. monetary policy, supervises and regulates financial institutions, monitors financial system risks, and promotes consumer protection. Of particular importance, it supervises bank holding companies and other key financial institutions. The Fed’s potential impact on risk response, management, and mitigation is enormous. Its response to the coronavirus pandemic, to use a current example, underscores the scope and scale of its potential to impact every aspect of the U.S. financial system.  

The Fed is responsible for ensuring that supervised financial institutions are resilient to all material risks, both macroprudential and microprudential. Climate risk – and its associated economic and financial market consequences – directly and indirectly impacts bank balance sheets, strategies, and operations, and could increase credit, market, liquidity, and operational risk at financial institutions. Because this will implicate the safety and soundness of both individual firms and the financial system as a whole, the Fed must understand and address these risks.

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