Singapore’s Menon becomes Network for Greening the Financial System chair

Ravi Menon, the long-serving managing director of the Monetary Authority of Singapore, has been appointed as chair of the Network for Greening the Financial System (NGFS).

The NGFS, whose secretariat is provided by Banque de France (BdF), brings together a growing number – currently 105 – of central banks and supervisors, as well as 16 observers, to share best practice and contribute to the development of environment and climate-risk management, and to encourage mainstream finance to support green investments.

The network, which launched at the ‘One Planet Summit’ in Paris in 2017, has also announced today (17 January) that Deutsche Bundesbank executive board member Sabine Mauderer has been named to the newly created role of vice-chair.

The appointments come as governments and monetary authorities worldwide place growing emphasis on the importance of green finance and green fintech.

The BdF’s governor, François Villeroy de Galhau, only last month described green finance as “the key element of financial innovation in the years to come” during an online event organised by the Bank for International Settlements (BIS) to herald the imminent opening of its ‘Innovation Hub’ network’s Eurosystem centre. De Galhau said that expertise gained through the BdF’s hosting of the NGFS’s secretariat would be helpful for the new centre, which will have a dual-location in Paris and Frankfurt.

‘Strengthening the resilience of the financial system’

Menon succeeds European Central Bank executive board member Frank Elderson, a Dutch national who has been chair since the NGFS’s establishment. 

Elderson’s four-year period at the network’s helm has seen its membership climb from eight founding members, with authorities to have recently signed up including Banco Central de Reserva del Perú, the Central Bank of Jordan, Banco Central de la República Dominicana, Turkey’s Banking Regulation and Supervision Agency (BRSA) and the Jersey Financial Services Commission.

The NGFS issued its first comprehensive report, the 42-page ‘A call for action – climate change as a source of financial risk’, in April 2019, and has since worked on operational guides and analytical material in order to better equip its members and help them take action on the increasingly high-profile topic of climate change domestically. It also published the ‘NGFS Glasgow Declaration: Committed to Action’ to coincide with the 2021 United Nations Climate Change Conference (COP26), held in Glasgow a couple of months ago.

“We must strengthen the resilience of the financial system to the risks from climate change and scale up the financing needed to support the transition to a sustainable global economy,” Menon said, adding that he looked forward to “harness[ing] and accelerat[ing] the NGFS’s collective efforts towards achieving the goals set under the Paris Agreement, the international treaty on climate change adopted in 2015.

“It has been a great honour and privilege to chair the NGFS from its infancy to the truly globally ground-breaking and influential network that it has become, now covering almost the entire world economy and all tasks and responsibilities of central banks and supervisors,” said Elderson. “The new NGFS leadership will carry forward the urgent and vitally important work contributing to a Paris-compatible financial system, building on the commitment to action by the NGFS membership.”

‘Climate change is having a clear effect’

The NGFS has also announced the expansion of its steering committee to include the Banca d’Italia and Banco Central do Brasil (BCB).

“Climate change is having a clear effect on all our countries, threatening economic growth, financial stability and the well-being of our populations,” said Banca d’Italia governor Ignazio Visco. “The primary responsibility for tackling climate change rests with governments and requires strong international co-operation at the political level. However, a key role in financing the transition will be played by the financial system; thus, central banks, financial regulators and supervisors also have important tasks to perform.”

Visco’s counterpart in Brazil, Roberto Campos Neto, meanwhile said: “Currently, it is impossible to talk about sustainability and the role of central banks without mentioning the importance of the NGFS. The production of relevant material and the dialogue and exchange of best practices and experiences between NGFS members are invaluable for better understanding how central banks can support this agenda. Banco Central do Brasil is eager to contribute even more to this debate.”

Both Menon and Mauderer have a two-year term, with the latter set to take over as chair for the subsequent two years. The NGFS’s secretariat is run by Jean Boissinot.

Menon was appointed managing director of the Monetary Authority of Singapore (MAS) in 2011. He was previously permanent secretary at the Ministry of Trade & Industry (MTI) and deputy secretary at the Ministry of Finance (MOF).

‘Harnessing Technology to Power Green Finance’ was the theme of last year’s MAS-organised ‘Global FinTech Hackcelerator’ competition, while green finance was the also the focus of last year’s Banca d’Italia and BIS Innovation Hub-run ‘G20 TechSprint 2021’.

*** François Villeroy de Galhau was last week elected as new chair of the BIS for a period of three years. He succeeds Jens Weidmann, who was chair until the end of December 2021 when he concluded his tenure as Bundesbank president.

FURTHER READING

Global Government Fintech’s dedicated ‘Resilience’ section