How Climate Transition Risk Is Quietly Reshaping Bank Liquidity and Repo Market Pricing
Published on: Jan. 12, 2026, 9:08 a.m. | Source: Devdiscourse
The paper shows that banks with greater exposure to carbon-intensive borrowers already pay higher costs for short-term funding in Europe’s repo market, even though these transactions are secured and traditionally seen as risk-free. Climate transition risk therefore amplifies financial stress and creates uneven monetary policy transmission, making it a present-day concern for financial stability rather than a distant threat.
