What is the ‘green swan’, which can cause the next global financial crisis

After the 2008 crisis, the urgency to try to anticipate global crises grew as much as the fear of recurrence. It was at this time that economists began to use the term “black swan” to refer to events outside the curve and which have a strong negative or even catastrophic impact.

Last week, the Bank for International Settlements (BIS), known as “the bank of central banks”, based in Switzerland, published the book “The green swan”, a study by Patrick Bolton, Morgan Despres, Luiz Pereira da Silva, Frédéric Samama and Romain Svartzma.

From the black swan, the authors created the figure of the “green swan” to refer to the perspective of a financial crisis caused by climate change. “Green swans are events with extremely disturbing potential from a financial point of view,” Luiz Pereira da Silva, deputy general director of BIS and co-author of the study, told BBC News Mundo.

The economist explains that extreme weather events, such as the recent fires in Australia or hurricanes in the Caribbean, have increased their frequency and magnitude, which brings great financial costs. The losses are explained by interruptions in production, physical destruction of factories, sudden price increases, among others. People, companies, countries and financial institutions can be affected.

“If there is a ripple effect on the economy, other sectors will also suffer losses. All of this could end in a financial crisis”, says Pereira da Silva. Larry Fink, executive director of BlackRock, the world’s largest asset management fund, warned in mid-January that climate change is about to trigger a major overhaul. “We are on the verge of a fundamental change in the financial system,” wrote Fink in his annual letter to shareholders.