MNI BRIEF: ECB Should Limit Its Role On Climate: Weidmann

The European Central bank should not attempt to emulate or supersede democratic institutions in its approach to fighting climate change, Bundesbank president Jens Weidmann said in a speech Monday, although adding that climate-related financial risks should be factored into its risk management.

Monetary policymakers could also consider making climate-related reporting a cornerstone of the ECBs collateral requirements and bond purchasing program, Weidmann told the ILF Online-Conference at Goethe University Frankfurt. But the ECB must not "raise expectations that we cannot meet, by giving the impression that central banks "can solve the problem of climate change on the side," he added.

The Eurosystem has a legitimate interest in making climate-related financial risks more transparent, Weidmann said, but he saw problems arising "when monetary policy, financial supervision or banking regulation are pressed into service for other purposes.

At worst, the existing core tasks could end up taking a back seat without the new targets being met," Weidmann said. Nor should the scale of climate action depend on inflation developments, as it might were ECB asset purchase programs to favour green bonds. "Let me be clear," he concluded: "Like Christine Lagarde, I am convinced that we all can do more to mitigate climate change, without risking conflict with our very own tasks. And we should do more!" The ECB announced Monday its intention to invest in euro-denominated Bank for International Settlement green bonds.