House Financial Services Committee Chairman Patrick McHenry (NC-10) and Financial Institutions and Monetary Policy Subcommittee Chairman Andy Barr (KY-06) have requested the Government Accountability Office (GAO) to assist in evaluating federal banking agencies’ memberships in the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).
Global governance bodies like the NGFS often operate in a manner that risks U.S. financial regulation’s sovereignty to outside influence. Committee Republicans aim to ensure transparency in American involvement with these organizations to protect U.S. competitiveness and the safety of the financial system.
In their letter, McHenry and Barr stated, “We write to request that the Government Accountability Office (GAO) assist in evaluating federal banking agencies’ memberships in the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).”
The NGFS originated from the ‘Paris One Planet Summit’ in December 2017 with a purpose of “strengthening the global response required to meet the goals of the Paris agreement and to enhance the role of the financial system to manage risks and mobilize capital for green and low-carbon investments.” The Secretariat of the NGFS is provided by Banque de France, with no budgetary information available publicly.
The Federal Reserve Board (FRB) joined NGFS as a member in December 2020, followed by the Office of Comptroller of Currency (OCC) in 2021, and Federal Deposit Insurance Corporation (FDIC) in 2022. These agencies informed that there was no formal application submitted despite Article 3i of NGFS charter requiring an official request submission.
“Transparency on how Banque de France-sponsored NGFS is funded is unclear,” they added. U.S. regulators do not seem to have insight into its funding mechanisms, which allows operations financially backed by entities including China, Russia, and political activists. This structure could lead to partisan funding pass-throughs providing funders with ‘prestige advantages.’
They noted that FRB, FDIC, and OCC have started incorporating NGFS models into U.S. regulatory frameworks without identifying who determines what is considered ‘plausible.’
Due to lack of transparency from U.S. regulators, Congress has been forced to guess how much resources are devoted to joint work with NGFS. Requests for details from these agencies about their involvement have been minimally responsive.
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