The macroeconomic environment is being shaped by the interest rate reversal and heightened uncertainty. So far, the German financial system has coped well with the rise in interest rates over the last year, but the effects of this rise have not yet fully materialised. Structural change in the economy is also likely to further increase credit risk.

Central banks ought to incorporate climate scenarios into their economic models and forecasting methods, said Executive Board member Sabine Mauderer following the publication of new NGFS reports.