July 13, 2021
In the US, the Fed has only started kicking the tires on climate change talks at its regional branches. However, the ECB is singing a different tune. ECB President Lagarde has been an outspoken advocate for action on climate change and is finally implementing it in policy. The ECB said climate policy will affect disclosure of information, risk assessment, collateral, and compare sector asset purchases. They will align asset purchases with a framework set forth by the EU and Paris agreement. They are also considering what green monetary policy might look like in the Euro area. Finally, climate stress tests will enter in for many European banks, where they will have to show robustness to climate shocks.
FINSUM + Magnifi: This is a huge step for global central banking. The ECB will have a strong impact on ESG bond yields and could spur more progressive central banking practices worldwide.
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