China’s central bank will increase the allocation of green bonds in the country’s foreign exchange reserves and limit investments in high-carbon assets, People’s Bank of China (PBOC) Governor Yi Gang said, reported Caixin.
The central bank will mobilize funds to support the national transition to a low-carbon economy, manage financial risks related to climate change and increase international cooperation, Yi said Tuesday in a panel discussion at the Boao Forum on Asia in Hainan province.
Yi said China has less time than developed economies like the US and European countries to achieve its goals and faces a steeper carbon neutrality curve. “We need to make even greater efforts, prepare in advance and urge financial institutions to transform as soon as possible,” Yi said. The central bank is studying how to “systematically incorporate climate change factors in the stress tests for financial institutions,” he said.
China has never disclosed how much of its foreign exchange reserves it allocates to green bonds. As of March, China had $3.17 trillion of foreign exchange reserves, the largest in the world. Gold accounted for $106 billion of the reserves, according to the State Administration of Foreign Exchange (SAFE).