There Is ‘Not Going To Be a Free Lunch’ on Climate Change, ECB’s Wunsch Says

17 July 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch emphasised on Monday the necessity for central banks to be clear that there would be no free lunch in terms of fighting climate change, and underlined the importance of upholding the existing policy framework to avoid creating unrealistic expectations.

Speaking at the ECB conference on central, eastern and south-eastern European (CESEE) countries, Wunsch, who heads the National Bank of Belgium, said that the fight against climate change was ‘not going to be a free lunch.’

Policymakers needed to ‘contradict in a very systematic way’ the idea that, in the fight against climate change, ‘we should forget about rules, and not only for the next few years, but for the next thirty years, because it's a problem that's not going to solve in three to four to five years’, he said.

Such arguments were ‘creating expectations that will never be met’, he added

‘Dealing with transition is something we need to do. It is going to have some impact. Not I mean, if we do it well, I don't think it's going to be huge, but it will have some impact. And if the only way to solve the problem is to invent some free money coming from somewhere or being in denial of the realities of some economic constraints, I think I think this is not the way to go’, he said.