ECB Forecasting Should Incorporate Climate Change, Villeroy Says
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The European Central Bank should integrate climate change and energy transition into its forecasting and assessment of collateral, Governing Council Member Francois Villeroy de Galhau said.
“Climate change, as well as energy transition, already have an impact on economic activity and prices, and they will more and more,” Villeroy, the Bank of France governor, said in an interview with La Croix, a French newspaper. “We should incorporate this dimension into our economic forecasting models.”
The remarks add to a spate of commentary by ECB officials on a topic that has focused their minds even more since the advent of Christine Lagarde’s presidency of the institution. Among them is Executive Board member Benoit Coeure, who said on Thursday evening that central banks can’t be at the forefront of the fight against climate change, but they can help.
“Climate change can change the value of securities that we accept as guarantees in monetary policy -- the collateral -- depending on whether the asset is threatened or not by climate risk. This risk should now be taken into account,” Villeroy said.
Villeroy also said that the French economy is not “sheltered from a global cooling,” but is resisting quite well with growth expected at 1.3% this year. He went on to repeat calls for the Germany and Netherlands to use their fiscal space to support growth and employment.
--With assistance from Yuko Takeo.
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