08 December 2019

POLITICO: Don’t bank on the ECB saving the planet

Christine Lagarde is confronting the limits of her pledges for the central bank. The ECB could put greater focus on climate change in its macroeconomic projections and make sure that supervised banks are taking environmental risks seriously.

The newly appointed ECB president this week began rowing back on her call to put the institution’s financial firepower into greening the economy. Her future colleagues on the Executive Board are also talking down the power of what Frankfurt can do for the environment.

“The mandate of the ECB is not about climate change,” Lagarde told EU lawmakers during her first public hearing as president on Monday. The central bank is primarily tasked with safeguarding price and financial stability.

The move to reduce talk of environmentalism also comes after Jens Weidmann, Germany’s influential central bank governor, shot down the idea in October — stating that green politicking should be left to politicians, or otherwise central bank independence could be under threat.

“I agree with Mister Weidmann,” Lagarde said Monday. “But it doesn’t stop us from looking in our operations and identifying how we can be effective.”

The ECB can also make sure its corporate pension portfolio for employees holds greener assets.

ECB watchers and think tankers chalk up the change in tone to Lagarde confronting the realities of the job — and unrealistic expectations.

Full article on POLITICO

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