Financial stability is essential for sustainable economic growth, and prudential policies have been reinforced since the Global Financial Crisis (GFC) to safeguard this stability. The Basel III framework introduced stringent capital, liquidity, and risk management requirements for banks, strengthening their resilience. In the face of growing climate-related risks, central banks and supervisory authorities must ensure that financial systems remain stable. Extreme weather events and abrupt transitions to a low-carbon economy can lead to significant financial losses, including asset stranding and increased defaults, threatening overall financial stability. Central banks and supervisory authorities must integrate climate risks into their financial supervision frameworks, adapting existing tools to manage these complex, systemic risks. Prudential responses must encompass both individual institutions and broader financial systems to mitigate the impact of climate change on financial stability. Ensuring a resilient financial system is crucial for maintaining economic stability in the transition to a low-carbon future.

Scientists have long warned about the severe environmental consequences if global temperatures continue to rise. According to the 2021 IPCC report, the Earth's temperature has increased by 1.1°C above preindustrial levels, and the world is projected to exceed 1.5°C within two decades, even with emission reduction efforts. International initiatives, starting with the 1992 UNFCCC and the 1997 Kyoto Protocol, laid the groundwork for climate action. The 2015 Paris Agreement, a pivotal moment, set a goal to limit warming to below 2°C, ideally 1.5°C, through nationally determined contributions (NDCs). Addressing climate change requires systemic shifts in economic structures, moving away from fossil fuels toward renewable energy, promoting decarbonization, and emphasizing resource efficiency. While transitioning to a low-carbon economy poses initial costs, the long-term benefits include reduced environmental damage, better health, and enhanced energy efficiency. The ongoing global cooperation and economic transformation are crucial for mitigating climate change impacts.

Human activities have caused significant changes in the climate system, leading to more frequent and intense extreme weather events such as heatwaves, droughts, and tropical cyclones. Global warming poses escalating risks, with even a 1°C –2°C increase above preindustrial levels disrupting ecosystems and threatening coral reefs, polar ice caps, and species. Beyond 3°C, the impacts are expected to turn catastrophic, risking ecological collapse and mass displacement. Climate change also introduces severe physical risks to economies by damaging infrastructure, disrupting agriculture, and increasing costs related to property damage and healthcare. Rising sea levels threaten coastal areas, while extreme weather events fuel price increases and food shortages. Despite challenges in quantifying these economic impacts, interdisciplinary research and advanced modeling aim to enhance assessment accuracy. Urgent global action is required to mitigate climate change and protect ecosystems and economies from irreversible damage.

This chapter examines early decisions made by the Trump Administration that could have an impact on the financing of terrorism. The chapter also ties together the previous chapters – specifically looking at overlaps, regulatory, technological, or other in the area of terrorist financing and the countering of it.

Climate change presents significant risks to economic and financial stability, compelling central banks to address its impacts on inflation and output. As climate-induced disruptions – such as extreme weather events and carbon taxes – affect price stability, central banks must adapt their monetary policies to mitigate these risks. Climate change can trigger inflationary pressures, alter labor productivity, and impact capital stocks, influencing the natural interest rate and overall supply. The ecological transition also poses challenges, potentially causing stagflationary episodes that complicate central banks’ dual mandates of price and output stability. Consequently, central banks are increasingly integrating climate risks into their frameworks, with the aim of maintaining their inflation-targeting objectives while supporting the green transition. Effective policy responses require a deep understanding of climate-related risks, enabling central banks to adjust their monetary tools and align their operations with sustainability goals. Addressing these challenges becomes essential to strengthening economic resilience in the face of climate change.

This chapter examines the mechanics of how the US government, specifically the State Department, sanctions terrorists pursuant to two legal mechanisms – terrorist designations of Foreign Terrorist Organizations and the sanctioning of individuals and organizations pursuant to E.O. 13224.

Climate finance has grown significantly in recent years, reaching $1.8 trillion in 2023. However, this remains insufficient to meet the Paris Agreement's temperature goals, particularly with net-zero emissions by 2050 requiring an annual investment of $5 trillion. Current investments in renewable energy remain lower than those in fossil fuels, contributing to a substantial global investment gap. While redirecting investments from carbon-intensive sectors could reduce this gap, the remaining shortfall is still projected at 2 percent to 3 percent of global GDP annually. Emerging markets and developing economies (EMDEs), face greater financial constraints in addressing climate challenges, with most climate finance concentrated in developed regions and China. Despite sufficient liquidity in global capital markets, private sector contributions to climate finance in these regions remain low, often due to limited fiscal space and financing access. Innovative financing solutions and public–private partnerships are critical to mobilize the necessary resources for green investments and climate adaptation in these vulnerable regions.

Emerging markets and developing economies (EMDEs) face significant obstacles in attracting the capital necessary to achieve climate and development goals, requiring at least $1 trillion annually for a successful green transition. Investment needs escalate further when adaptation and resilience measures are included, placing vulnerable populations at greater risk despite their minimal contributions to climate change. Current climate financing to EMDEs is insufficient, primarily public, focused on mitigation over adaptation, and often delivered as debt. Barriers such as high credit risk and regulatory uncertainties exacerbate the investment gap. Thus, private sector engagement is crucial to meet the Paris Agreement targets. Innovative financial strategies, including blended finance, can mobilize private capital by using concessional funds to enhance project viability. A coordinated global approach, involving partnerships among governments, international financial institutions, and the private sector, is essential for effectively addressing climate investment needs and fostering sustainable development in EMDEs.

This chapter examines the financing of ISIS and how the United States and the international community were able to thwart ISIS’s access to finance through a combination of methods, including the use of sanctions, the prosecutions of foreign terrorist fighters, and an aggressive bombing campaign.

The transition to a low-carbon economy requires a transformative shift akin to past industrial revolutions. This shift involves three key changes: redirecting corporate investment toward green technologies, reallocating capital from carbon-intensive industries, and adjusting household consumption toward sustainable practices, potentially affecting productivity, growth, and well-being. The process will incur short-term economic costs as investment is redirected, leading to stranded assets and slowed productivity. Additionally, global disparities in transition policies may also distort competitiveness and reshape trade patterns. Despite these challenges, the long-term potential for green growth remains promising, as falling renewable energy costs suggest that sustainable growth could eventually surpass that of fossil fuel-based economies. However, during the transition, the focus on environmental investments may not immediately expand production capacity, resulting in temporary economic and social costs.

This chapter examines cases where cryptocurrency has been used by terrorist actors. At the same time, the chapter also examines the important role played by the private sector in ensuring that virtual assets are not misused. The chapter also takes a peek at the role of government regulation in the industry and where the private sector has concerns regarding an overly interventionist approach that could stifle a new technology.