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Short abstract:

The years since the 2008 financial crisis have seen a reassessment of what is thought to constitute financial risk and accordingly if this risk can be measured using traditional probabilistic models. This paper analyses how central banks have started to work on the climate issue, theorizing it as a form of uncertainty within complex systems.

Long abstract:

The years since the 2008 financial crisis have seen a reassessment of what is thought to constitute financial risk and accordingly if this risk can be measured using traditional probabilistic models. Climate change is now for example considered as financial risk and has become an issue for central banks. This paper analyses how central banks have started to work on the climate issue, theorizing it as a form of uncertainty within complex systems. Departing from a previous understanding of risk as something statistically measurable, this uncertainty implies a critique of central bank’s expertise and knowledge creation. More concretely, I investigate a 2020 publication by the Bank for International Settlements (BIS) and Banque de France called “The green swan”. I show how the risks thought to arise from climate change are framed as “black swan events”, a conceptualisation taken from the field of complexity theory, meaning an unlikely, yet extreme event, which cannot be predicted. In the figure of the green swan, however, the statistically improbable climate crisis becomes a certainty. A tension thus arises between such uncertainty and certainty, indicative of a dilemma central banks face in wanting to incorporate critique of modelling while not wanting to step out of an “expert”, “non-political” role. I argue that the green swan attempts to solve this dilemma by creating a form of “good economy”, pre-empting climate change as risk in the form of a moral horizon, rather than through either new forms of modelling or political solutions.