China’s central bank will also analyse how policymakers should respond to climate change, its deputy governor said.

China’s central bank has joined the global conversation on managing the risks of climate change, saying it’ll study the impact on the financial sector and regulatory framework.

A warming climate is a “major factor” that could cause changes to economic and financial systems, and global central banks should stay ahead of the curve to respond to possible impacts, Chen Yulu, a deputy governor of the People’s Bank of China, said at an event on Saturday, according to the central bank’s newspaper Financial News.

Chen said the PBOC will focus on analyzing the influence on different parts of the financial sector and how policy makers should subsequently respond. The bank will also conduct a feasibility study on factoring in the impact into its macro-prudential framework.

Climate change could “trigger declines in the value of collateral and tighten credit conditions,” a scenario that can be amplified by markets and develop into systemic risks, the newspaper quoted Chen as saying. The risks could also weaken the balance sheets of households and companies, reducing the potential growth rate, he said.

China has been active in promoting so-called green finance in recent years, co-founding a network of monetary authorities in 2017 to draw experience from each other, as well as running a project on integrating climate risk into financial supervision. The country is also the world’s biggest green bond seller with a stock of nearly 10 trillion yuan ($1.43 trillion) as of June 2019.