"A lot of our largest banks who are internationally active are already being supervised in other jurisdictions to make sure they are measuring, monitoring and managing climate related financial risks," Brainard said in comments at a National Association for Business Economics conference. "The U.S. has been behind and we need to catch up...The nature of climate change is such that...it could pose significant risks both in terms of sudden changes in asset prices but also change the financial system generally."

(Reporting by Howard Schneider; Editing by Chizu Nomiyama)