The greening of the ECB

The greening of the ECB

Fecha: febrero 2020

Erik Jones

Cambio climático, BCE, Política monetaria, Economía verde

Spanish and International Economic & Financial Otlook, SEFO, V. 9 N.º 1

Incoming ECB President Christine Lagarde has signaled a commitment to ‘green’ the ECB. In this regard, the ECB could potentially support efforts to adapt to climate change through changes to supervisory requirements, credit rating agencies’ methodologies, and/or its own formulas for macro-prudential supervision. It could even intervene in financial markets under a ‘green’ asset purchase program, however this could potentially create distortions, while effectiveness would be conditioned on the timing of such programs. The institution could even consider the use of its own investment portfolio to meet such objectives, creating a signalling effect. Nevertheless, to date, former ECB presidents have interpreted this dual mandate as prioritizing price stability over any economic policy objective. Thus, critics have expressed concern that going beyond that, i.e., with the ECB’s foray into climate change activism, could undermine the political independence of the central bank.

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