Published 2026-03-15
Summary: Central banks around the world are preparing their first assessments of potential economic damage linked to the US–Iran conflict, as part of broader efforts to refine monetary policy and financial stability frameworks amid geopolitical tensions. This process aligns with ongoing work on climate-related economic damage assessments and the development of new analytical tools to gauge persistent effects on growth and the financial system.
What We Know
- Central banks from major financial centers are preparing to assess the economic damage related to the ongoing US–Iran conflict.
- Existing climate-related work by central banks—such as NGFS surveys and Phase V climate scenarios—has focused on capturing persistent economic impacts and improving financial stability planning.
- NGFS-related findings indicate a substantial share of central banks have observed damages from acute climate events in recent years, highlighting the broader demand for robust damage-function modeling.
- Short- and long-term climate scenario work by NGFS is cited as a model for developing tools to assess and prepare for economic impacts on the real economy and financial system.
- European and other central banks have publicly noted the evolution of climate-focused analytical toolkits, underscoring a trend toward more sophisticated risk assessment frameworks.
What’s Still Unclear
- Whether the specific Phase V climate damage function is currently implemented in policy or remains descriptive is not confirmed in the available information.
- Exact scope and methodology of the ongoing US–Iran conflict damage assessment by central banks, including which economies are included and how impacts are measured, are not specified.
- Details on how the climate-damage findings intersect with the current geopolitical assessment are not provided.
Context
Central banks continuously monitor a range of risks to economic stability, including geopolitical tensions and climate-related disturbances. International networks like NGFS have promoted standardized approaches to evaluating damage and resilience, influencing how monetary authorities calibrate policy and supervise financial systems. The emphasis on damage functions and scenario analysis reflects a broader trend toward integrating non-traditional risk factors into central banking practice.
Why It Matters
Understanding potential economic damage from geopolitical conflicts helps central banks prepare monetary and financial stability responses, guide policy communication, and bolster resilience in the banking system. The adoption of more advanced assessment tools may affect risk pricing, capital requirements, and international policy coordination.
What to Watch Next
- Results or preliminary findings from the upcoming economic damage assessments by major central banks.
- Any updates on the implementation status of NGFS Phase V scenarios in policy-making or supervisory practices.
- How climate-related damage assessments influence monetary policy discussions and risk management frameworks.
- Official communications from central banks outlining implications for financial stability and macroeconomic outlooks amid geopolitical tensions.
FAQ
Q: What is the focus of the current central bank assessments?
A: The focus is on assessing economic damage potentially arising from geopolitical tensions, with related work on climate-related damage understanding influencing risk frameworks.
Q: Are there confirmed figures or dates tied to these assessments?
A: No specific figures or dates beyond the general description of upcoming assessments are confirmed in the available information.
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Source Transparency
- This article is based on a short preliminary brief and may not reflect the full details available in ongoing reporting.
- Source links are provided in the Sources section where available.
- A limited open-web check was used to clarify key details when possible; unclear items remain clearly marked.
Original brief: Central banks from Washington to London to Jakarta are about to make their first assessment of the economic damage wrought by the conflict between the US and Iran…
Sources
- 75% banks indicate economic damage from climate events: NGFS
- Over two-thirds of central banks report climate-related economic damages
- The NGFS's New Climate Damage Function: A Flawed Analysis With Massive …
- Climate risks: no longer the tragedy of the horizon – European Central Bank