ECB does not have a mandate to be directly involved in the fight against climate change

ECB does not have a mandate to be directly involved in the fight against climate change

The European Central Bank (ECB) does not have a mandate to be directly involved in the fight against climate change. The head of the German central bank Bundesbank, Jens Weidmann, said that greater activism in this direction could undermine the independence of the ECB. Climate change poses an increasing risk to the development of the global economy, leading to debates about the role that central banks should play in combating climate change. For example, Christine Lagard, the head of the ECB, is calling for greater bank activism in this area. On the other hand, Weidmann, who belongs to the Conservative wing, advocates that the central bank play only a limited role in the fight against climate change. He said the ECB's active role in climate policy, or in other policy areas, could undermine the bank's independence and ultimately jeopardize its ability to maintain price stability in the euro area. According to him, the independence of the ECB is a commitment that the bank should focus on in the first place. "Central bankers are not authorized to correct the actions or inactions of politicians," Weidmann said. He added that the bank did not gain independence in order to make decisions that politicians themselves are not willing to make. One of the topics currently being discussed is the modification of the ECB's bond purchase program in order to favor so-called green bonds. Weidmann disagrees. "The ECB has nothing to penalize or subsidize certain industries. It is up to governments and parliaments to decide," said the head of the Bundesbank.