Bundesbank President Jens Weidmann on Thursday called on the Eurosystem, which includes the European Central Bank (ECB) and the euro zone’s 19 central banks, to consider climate-related financial risks before making monetary policy decisions.
“The Eurosystem … should consider only purchasing securities or accepting them as collateral for monetary policy purposes if their issuers meet certain climate-related reporting obligations,” Weidmann, who also sits on the ECB’s Governing Council, wrote in an opinion piece for the Financial Times.
Weidmann suggested that central banks should use only credit ratings from agencies that appropriately include climate-related financial risks.
He, however, pressed on the governments to do their part by increasing taxes on carbon or using “cap and trade” schemes. It is not the task of the Eurosystem to penalise or promote certain industries, Weidmann said.
With the coronavirus crisis, it is vital that the ECB keeps its monetary policy accommodative to support the economies and maintain price stability, Weidmann said.
Weidmann will be speaking to the European Banking Congress on the role of central banks in combating climate change on Friday.