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ECB's Weidmann calls on cenbanks to address climate-related financial risks: FT - Metro US

ECB’s Weidmann calls on cenbanks to address climate-related financial risks: FT

29th Frankfurt European Banking Congress (EBC) takes place in Frankfurt

(Reuters) – 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 https://on.ft.com/3lFrFF7 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.

(Reporting by Shubham Kalia in Bengaluru; Editing by Anil D’Silva and Sherry Jacob-Phillips)

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