Frank Elderson: Policymakers as policy takers – accounting for climate-related and environmental factors in banking supervision and monetary policy

Speech by Mr Frank Elderson, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at the Peterson Institute for International Economics, Washington DC, 21 April 2023. 

Central bank speech  | 
25 April 2023

Central banks and supervisors are not climate and environmental policymakers.

Central banks and supervisors are climate and environmental policy takers.

There are a lot of climate-related and environmental factors to take into account to deliver on the mandated objectives of central banks and banking supervisors.

This is not a message that is just coming from me. It is, in fact, the global consensus among central banks and supervisors as established through the Network for Greening the Financial System, which has 121 members worldwide, including six authorities in the United States. It is acknowledged in the work programmes of global standard-setting bodies such as the International Sustainability Standards Board, the Financial Stability Board and the Basel Committee on Banking Supervision. And it is reflected in the actions taken by central banks and supervisors in the pursuit of their mandates.

Today, I will explain why central banks and supervisors taking climate-related and environmental considerations into account should not be seen as controversial. I will outline how the actions that central banks and supervisors take to account for climate-related and environmental factors follow from their democratically assigned mandates. I will show how these actions build on the awareness that the economy will be subject to increased shocks from ongoing climate and environmental crises while undergoing one of the biggest structural transformations in modern history. And I will show that these developments without any doubt will have a material impact on the financial sector too.