MNI BRIEF: ECB Steps Up Climate Impact Work On Econ, Monpol

The ECB will explore whether further changes will be needed to its monetary policy toolkit as it intensifies its work on the effects of the green transition on funding, investment needs as well as how the shift impacts the economy, the central bank said Tuesday.

The results of its work would also inform the ECB’s modelling framework and officials would also be exploring the need for further changes to its monetary policy instruments and portfolios in the light of transition.

The central bank has recently mooted the idea of adopting dual interest rates in its lending operations to favour green over brown investments, something which has also won the public support of French President Emmanuel Macron. Central banks and national treasuries continue to use green bonds as polict instruments. The ECB was a large buyer through both the PEPP and APP (MNI: New Italian Green Bond Maturities Seen Close To Existing)