ECB’s Lagarde moots buying ‘green’ bonds to help climate

European Central Bank President Christine Lagarde stressed that climate protection remained a top priority even though the economic fallout from the coronavirus pandemic had dominated the ECB’s agenda in recent months. — Reuters pic
European Central Bank President Christine Lagarde stressed that climate protection remained a top priority even though the economic fallout from the coronavirus pandemic had dominated the ECB’s agenda in recent months. — Reuters pic

FRANKFURT, July 8 — European Central Bank chief Christine Lagarde today said she wants to consider “every avenue available” to tackle climate change, signalling for the first time that the central bank could include green bonds in its massive stimulus scheme.

In a video interview with the Financial Times, Lagarde stressed that climate protection remained a top priority even though the economic fallout from the coronavirus pandemic had dominated the ECB’s agenda in recent months.

“I want to explore every avenue available in order to combat climate change,” the former French finance minister said, adding that “money talks”.

“I have children, I have grandchildren. I just don’t want to face those beautiful eyes, asking me and others: ‘What have you done?’”

The FT said it was “the first time” Lagarde had committed to examining climate-friendly changes to all the bank’s operations, including bond purchases.

Lagarde started her Frankfurt posting late last year with a pledge to pursue a “greener” monetary policy, raising the prospect that the bank could increase the share of climate-friendly investments in its portfolio.

The ECB describes “green bonds” as those “earmarked to finance investment projects with an environmental benefit”, as opposed to bonds linked to carbon-intensive industries or other “brown” sectors that contribute to global warming.

Lagarde’s climate ambitions are a key part of a major strategic review launched by the ECB in December.

Critics however say combatting climate change is the responsibility of governments, not central bankers who only have limited tools at their disposal.

The ECB has spent nearly €3 trillion (RM14.5 trillion) since 2015 hoovering up government and corporate bonds to encourage spending and investment in the hopes of driving up growth and inflation.

Under Lagarde’s leadership, the ECB has also additionally committed to buying more than €1.3 trillion in “pandemic emergency” bonds to cushion the impact of the coronavirus on eurozone economies.

The ECB’s governing council is set to hold its next monetary policy meeting tomorrow but no major announcements are expected.

“We have done so much that we have quite a bit of time to assess (the latest economic data) carefully,” Lagarde told the FT. — AFP

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