This paper aims to highlight the main economic consequences of climate change from a central bank point of view. It describes the main risks to the Italian economy and financial system, arising both from climate-related natural events and from the decarbonization process. It also outlines recent trends in sustainable finance and its risks and opportunities.
Our estimates, which are limited by the data and methodologies available, suggest that the impact of climate change on the Italian economy is rather modest overall and concentrated in a few sectors. Given the high exposure and the risk amplification effects due to financial interconnectedness, the risks for the financial system must be monitored with great care by integrating them into the risk management framework of central banks.