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Good to see the growing support at the @ecb to act on #climaterisks across its #monetarypolicy operations. However, the changes that Mr Villeroy proposes are overdue. We need to move from a debate on direction to one on speed. https://www.bloomberg.com/news/articles/2021-02-11/ecb-s-villeroy-proposes-climate-leap-for-corporate-bond-program h/t @UliVolz (1/6)
The ECB, together with many of its peers, considers climate change a significant financial risk that is not sufficiently accounted for by the bond ratings #centralbanks use to determine eligibility for their purchases and the collateral they accept. https://www.ngfs.net/sites/default/files/medias/documents/818366-ngfs-first-progress-report-20181011.pdf (2/6)
In its supervisory role, the ECB has clarified that it expects the banks it supervises to address these risks with no further delay. https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr201127~5642b6e68d.en.html (3/6)
Now, as Mr Weidmann @bundesbank highlighted last year: “Central banks must also practise what they preach. We owe it to our taxpayers to keep the financial risks that arise from our monetary policy operations in check ..." (4/6)
"... That’s why central banks should make sure that climate-related financial risks are given due consideration in their own risk management." https://www.ft.com/content/ed270eb2-e5f9-4a2a-8987-41df4eb67418 (5/6)
Taking 3-5 years to do that, as outlined by Mr Villeroy, is untenable. It is also a breach of a central bank's #fiduciaryduty to protect its balance sheet. And as Mr Bailey @bankofengland emphasized: "Uncertainty and lack of data is not an excuse." https://www.bankofengland.co.uk/speech/2020/andrew-bailey-speech-corporation-of-london-green-horizon-summit (6/6)
