ECB's Villeroy: Foundation Laid for Central Banks to Consider Nature Degradation in our Mandate
7 September 2023
By Mariana Somensi – NICOSIA (Econostream) - European Central Bank Governing Council member François Villeroy de Galhau on Thursday said that a new framework to guide central banks and regulators on nature risk would let monetary authorities and supervisors take into account the degradation of nature in their mandate.
In a speech at an event to launch the conceptual framework developed by the Network for Greening the Financial System (NGFS), Villeroy, who heads the Banque de France, said the framework ‘offers a common language and outlines a common method for assessing the financial risks linked to nature’.
Europe is ahead in the discussion of climate-related risks to the economy, he noted, warning that ‘the rest of the world must not fall behind’.
‘[A]s central bankers and supervisors responsible for financial and price stability, we know that the complex and interrelated issues between climate and nature must be managed jointly’, he said.
‘[T]he NGFS has laid the foundations that will allow central banks and supervisors to begin to operationally consider nature degradation in our mandate’, he said.
Villeroy welcomed an upcoming NGFS report with recommendations on how to correct current biases in economic models. The results would ‘pave the way for the development of nature-related scenarios relevant to the financial sector’, he said.
The impact of the Banque de France's stock portfolios on biodiversity had decreased in 2022 compared to 2021 as a result of the implementation of sustainable investment policies, he said. This was ‘a first step, but every journey has a beginning’, he said.