The Bank of England, the UK's central bank, has launched a "climate stress test" to examine how resilient banks and large businesses are to the risks associated with climate change. 

The Bank, which sets interest rates and oversees monetary policy, is investigating the effects of climate change in its Biennial Exploratory Scenario (BES). 

According to the Bank's governor, Mark Carney, climate change will "affect the value of virtually every financial asset." 

The BES will ask firms central to the British financial system how they are placed to react to a range of policy scenarios. 

This type of exercise is usually employed to understand how banks can react to financial market turbulence and how adequate capital reserves are. 

This BES will also test insurers' resilience and will include physical risks in "three distinct climate scenarios." These range from taking "early, late and no additional policy action to meet global climate goals," the Bank explained. 

The Bank is asking "climate scientists, economists and other industry experts" to respond to the BES, which will attempt to look forward 30 years. 

These exercises are usually set over a shorter period, but the Bank said it needs to look further ahead as "climate-related risks crystallize over a much longer time frame than conventional risks."

"Climate change will affect the value of virtually every financial asset; the BES will help ensure the core of our financial system is resilient to those changes," Carney explained.

"The BES... builds on the considerable progress in addressing climate-related risks that has already been made by firms, central banks and regulators," he added.

The BES will report its findings in 2021.