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Luiz Awazu Pereira da Silva, deputy general of the Bank for International Settlements

The Bank for International Settlements hopes that the coronavirus pandemic can aid understanding of complex global risks, encouraging public and private institutions to work more closely together to tackle the effects of climate change.

Will Covid-19 lead to more action on ‘green swans’?

GBIF Virtual 2020 | Keynote presentation by Luiz Awazu Pereira da Silva

The BIS came up with the term “green swan” earlier this year, using it to define climate-related risks that have the potential to trigger international financial crises (see

In contrast with the surprise associated with Taleb Nassim’s “black swans”, there is high likelihood, almost certainty, that “green swans” will happen — but nobody can be sure exactly when or how they will impact the financial system.

In a keynote presentation for this year’s Global Borrowers & Bond Investors Forum, Luiz Awazu Pereira da Silva, deputy general manager of the BIS, argues that Covid-19 should be seen as one of these “green swan” events, because pandemics are somehow also related with human action affecting our environment.

He says that the economic fallout from the coronavirus pandemic should serve to demonstrate more clearly how markets have been mispricing climate and health related global threats.

“After Covid-19, we may have arrived at a tipping point where societies really begin to understand the danger of complex global risks,” Pereira da Silva says. This growing awareness is helping to gain more social acceptance for action to mitigate global risks.

So what is the solution? Pereira da Silva believes that with global risks, there should be global responses.

The private sector has been playing its part by financing climate-friendly initiatives through a distinct and growing market for green financial instruments.

Public institutions like central banks have also had a role in the transition to a greener economy, promoting sustainability through incorporating climate change related risks into their financial stability mandate and their reserve management decisions.

But Pereira da Silva says there is urgent need for more international co-operation between public and private actors, with the aim of changing mindsets to rethink the resilience of our social organisation by creating more buffers and insurance against “green swan” events.

Covid-19 has already generated a lot of discussion about the need for behavioural changes in working patterns and supply chains, as well as investment opportunities in research and infrastructure. Those new investments could help to transition towards a lower carbon economy. Many studies show synergies between the needed multiplier effects of this spending and their carbon reduction potential.

“This could be a basis for a very productive, very different but very green recovery,” Pereira da Silva says (see

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