Gov­er­nor of the Cen­tral Bank is warn­ing that cli­mate change is no longer sim­ply an en­vi­ron­men­tal con­cern but a grow­ing threat to eco­nom­ic and fi­nan­cial sta­bil­i­ty that pol­i­cy­mak­ers and reg­u­la­tors must pre­pare for now.

Speak­ing at the Glob­al Green Swan Con­fer­ence in Mani­la, Philip­pines, Gov­er­nor Lar­ry Howai said small and vul­ner­a­ble economies, par­tic­u­lar­ly in the Caribbean, are in­creas­ing­ly ex­posed to se­vere weath­er events that can dis­rupt agri­cul­ture, dam­age in­fra­struc­ture, fu­el in­fla­tion and place pres­sure on fi­nan­cial sys­tems.

He ad­dressed the con­fer­ence along­side the Gov­er­nor of the Cen­tral Bank of the Philip­pines and the Chief Ex­ec­u­tive of the Hong Kong Mon­e­tary Au­thor­i­ty.

"In the Caribbean and Cen­tral Amer­i­ca, the weath­er is part of the econ­o­my. The ques­tion is whether we plan for it or pay for it af­ter­wards," Howai said.

Draw­ing on re­cent re­gion­al ex­pe­ri­ences, he not­ed that cli­mate-re­lat­ed dis­as­ters car­ry sig­nif­i­cant eco­nom­ic costs.

Howai point­ed to the im­pact of Hur­ri­cane Melis­sa on Ja­maica, where dam­age es­ti­mates from the World Bank and the In­ter-Amer­i­can De­vel­op­ment Bank reached US$8.8 bil­lion, equiv­a­lent to 41 per cent of the coun­try's 2024 gross do­mes­tic prod­uct.

The dis­as­ter al­so con­tributed to a sharp rise in con­sumer prices, with food in­fla­tion ac­cel­er­at­ing in the months fol­low­ing the storm.

He al­so ref­er­enced the dev­as­ta­tion caused by Hur­ri­cane Beryl in Car­ri­a­cou and Pe­tite Mar­tinique in 2024, where about 98 per cent of build­ings were dam­aged or de­stroyed, ar­gu­ing that such events demon­strate why cli­mate change must be re­gard­ed as both an en­vi­ron­men­tal and fi­nan­cial sta­bil­i­ty is­sue.

Ac­cord­ing to Howai, cen­tral banks must now fo­cus on un­der­stand­ing how cli­mate-re­lat­ed shocks are trans­mit­ted through economies, af­fect­ing in­fla­tion, growth and the sta­bil­i­ty of fi­nan­cial in­sti­tu­tions say­ing,

“For cen­tral banks, the ques­tion is not whether cli­mate change mat­ters. The ques­tion is how cli­mate-re­lat­ed shocks are trans­mit­ted in­to in­fla­tion, growth, fi­nan­cial sta­bil­i­ty and ul­ti­mate­ly the in­sti­tu­tions we su­per­vise,” he said.

He said the Cen­tral Bank of T&T has been ex­pand­ing its work in this area through cli­mate-risk analy­sis, guid­ance for reg­u­lat­ed fi­nan­cial in­sti­tu­tions and col­lab­o­ra­tion with re­gion­al and in­ter­na­tion­al part­ners.

The gov­er­nor al­so high­light­ed that the bank joined the net­work for green­ing the fi­nan­cial sys­tem in 2021 and con­tin­ues to par­tic­i­pate in re­gion­al cli­mate-risk ini­tia­tives, in­clud­ing ef­forts to de­vel­op a Caribbean re­gion­al green tax­on­o­my.

He added that the bank com­plet­ed a sec­tor-wide, cli­mate-risk sur­vey in 2025 and is strength­en­ing cli­mate-risk su­per­vi­sion un­der its 2026-2031 strate­gic plan through en­hanced da­ta col­lec­tion and cli­mate stress test­ing.

Howai said the in­sti­tu­tion is now mov­ing from aware­ness to im­ple­men­ta­tion, with the aim of en­sur­ing house­holds, farm­ers and busi­ness­es are bet­ter pro­tect­ed from cli­mate-re­lat­ed loss­es.

He stressed that cli­mate re­silience should be viewed as an in­vest­ment in long-term macro­eco­nom­ic sta­bil­i­ty, fi­nan­cial sta­bil­i­ty and sus­tain­able eco­nom­ic growth.