Climate change poses significant risks to both advanced economies and emerging markets. While advanced economies face physical risks like damage and value destruction, emerging markets are more vulnerable due to their less diversified economies. With natural disasters causing around $290 billion in damages globally, emerging markets suffer from a higher insurance gap, relying more on government support. International institutions play a key role in addressing this gap by promoting green finance, supervision, and regulation.
In Europe, leadership in supervision and regulation is evident, especially in climate stress testing. Collaboration between the EU and China in dealing with climate change is crucial, focusing on areas like financial stability and transitioning to green finance.
Financial stability in Europe remains resilient, supported by profitable banks and efficient regulations. The EU single market plays a vital role in building resilience and supporting growth through better financing sources and risk sharing.
Addressing the challenges of an ageing population requires policy reforms in Europe, focusing on pension systems, labour markets, and migration. Technological advancements can also play a crucial role in mitigating the effects of demographic change.
Efforts to stabilize commercial real estate markets in Europe and China differ based on market dynamics and monetary policies. While leverage remains a common risk factor, efficient solutions vary across regions.
Cooperation between regional financing arrangements like ESM, AMRO, and the Latin America Reserve Fund enhances the global financial safety net, ensuring stability amid geopolitical uncertainties.