(Mis)managing Macroprudential Expectations

如何Central Banks Govern Financial and Climate Tail Risks

John Hogan Morris, Assistant Professor of Economic Geography, School of Geography, University of Nottingham and Hannah Collins, Postgraduate Researcher, School of Agriculture, Policy and Development, University of Reading, UK

Using a range of calculative devices, (Mis)managing Macroprudential Expectations explores the methods used by central banks to predict and govern the tail risks that could impact financial stability. Through an in-depth case study, the book utilises empirically-informed theoretical analysis to capture these low-probability and high-impact events, and offers a novel conceptualisation of the role of risk modelling within the macroprudential policy agenda.

‘John Morris and Hannah Collins are keen-eyed detectives. They take a seemingly innocuous technical exercise into assessing the risks of climate change to the UK’s financial sector and turn it into an imaginatively theoretical and empirically rich account of the wider implications of viewing climate change as just another set of risks to be managed by private finance and overseen by regulatory authorities such as the Bank of England. This bracing contribution will fire debate and shape an emerging and critical research agenda crossing financial geography, cultural economy, and climate justice.’
– Michael Pryke, Open University, UK

‘Why have central banks become preoccupied with developing strategies for coping with “tail risks” – highly unlikely but extremely damaging events? And what are the implications of these shifts in their practices for our collective ability to respond to the climate crisis? In this ground-breaking book, John Morris and Hannah Collins tackle these key questions by demonstrating how the Bank of England uses the governance of tail risk to actively reshape markets and change financial institutions’ expectations about their “carbon futures.” Crucially, they point to the dangers of reducing the governance of climate change to a calculable and profitable form of tail risk. As credit rating agencies, shadow banking institutions, and insurance companies begin to find new ways of profiting from these climate risks, they warn, it is the most vulnerable countries and populations that are likely to pay the highest price.’
– Professor Jacqueline Best, University of Ottawa, Canada

‘A hugely impressive achievement and a very important read when considering the turbulent economic times in which we live. Morris and Collins lift the lid on the cognitive and calculative tools currently being used by central banks as they seek to secure the future against uninsurable financial risks.’
– Matthew Watson, University of Warwick, UK

‘The high-impact low-probability events of the global financial crisis prompted a powerful transformation of the probabilistic risk management practices of financial stability governance. Focused on the Bank of England, Morris and Collins show how this transformation has been enacted through novel devices of calculation and regulation, and how it is currently shaping the role of central banks in climate change governance.’
– Paul Langley, Durham University, UK