A coalition of climate and environmental advocacy groups called on Belgium’s central bank to support moves by the European Central Bank (ECB) towards greening its monetary policy.
In an open letter published yesterday in French and Dutch national newspapers, the campaigners called for the Belgian National Bank (BNB) to give up its “dogmas” on the controversial principle of ‘market neutrality’. They also want the bank to support the removal of high-emission activities from the ECB’s €7 trillion balance sheet.
As the ECB examines its response to climate change, BNB governor Pierre Wunsch has opposed the introduction of climate and environmental considerations into ECB monetary operations. At issue are the eligibility criteria for ECB’s collateral framework, lending programs and corporate asset purchases.
Existing practices offer financing according to past market conditions, and so purport to be market neutral. However in practice, studies show that eligible companies are predominantly large and capital-intensive, with a strong bias towards fossil fuel and carbon-intensive industry.
There have been wide calls, including within the ECB, for the bank to move its monetary policy financing away from fossil fuels and towards sustainable alternatives. The issue is being considered as part of a major ECB strategy review to be published later this year.
However, Wunsch has spoken against these moves, as have Bundesbank president Jens Wiedmann and Austrian central bank Governor Robert Holzmann. They argue that considering climate change in monetary policy would threaten central bank independence. Within the Eurosystem, national central bank governors are voting members of the ECB’s Governing Council, the bank’s highest decision-making body.
The advocacy groups letter to the BNB warned of the urgency of the climate emergency and the imperative of rapidly reducing the emissions that cause it. “The debate on the role of central banks in the fight against global warming is not a free academic exercise,” it concluded. “Time is running out and the impact of the ECB is too great for us to sit on the sidelines.”
The letter follows recent legal action by environmental NGO ClientEarth, which charged the BNB with failing to protect environmental and human rights when purchasing bonds from high-emission companies as part of ECB monetary policy.
This page was last updated May 14, 2021
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