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(Mis)managing Macroprudential Expectations: How Central Banks Govern Financial and Climate Tail Risks

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Central banks play a crucial role in managing the risks associated with financial and climate crises by influencing macroprudential expectations. This approach involves using surveys to measure economic expectations and inform policy decisions, ultimately mitigating systemic risks and promoting climate resilience. By taking a proactive stance, central banks can help stabilize the financial system and support the transition to a more sustainable economy. This proactive approach is essential for building a more resilient financial system that can withstand the challenges of climate change. By governing expectations and managing risks, central banks can help ensure a more stable and sustainable future for all.

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