Central Bank of the Republic of Kosovo outlines supervisory focus on climate risk management and green finance

The Central Bank of the Republic of Kosovo’s Governor Ahmet Ismaili, speaking at the Second Sustainable Investment Forum, framed climate change as a source of systemic risk that can threaten financial stability and market functioning, and argued that banks and other financial institutions will increasingly need to manage physical and transition risks while supporting the green transition through sustainable finance. He noted that climate-related risks can directly affect the performance and asset quality of financial institutions, businesses, and households. In Kosovo, where bank lending remains the primary source of private-sector financing and more than 85% of deposits are currently lent into the economy amid the absence of capital markets, he linked sustainable finance to investment diversification and reduced concentration risk, including support for non-traditional sectors and clean energy projects. The central bank pointed to initiatives to advance the regulatory framework and promote sustainable finance, including joining international networks and developing roadmaps and guidance intended to support risk management and the financing of large, capital-intensive projects. Ismaili indicated that the central bank’s ongoing work will include strengthening its supervisory role, building institutional and sector capacity through education and international engagement, and supporting the development of sustainable financial infrastructure for the green transition.