ECB’s Visco: Climate Change a Challenge to Central Banks' Mandates

19 October 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Ignazio Visco on Thursday said that climate change could affect the mandate of central banks.

In a speech in Rome, a text of which was posted to the website of the Banca d’Italia, which he heads until the end of this month, Visco said that risks deriving from climate change could ‘affect the ability of central banks to achieve the institutional objectives of price stability and financial stability.’

‘Obviously, for each central bank, action on environmental sustainability must be well connected with the tasks and functions envisaged by its mandate’, he said.

Central banks could contribute by raising awareness, he said. ‘[A]nd knowledge of the risks linked to sustainability factors and the methods of their possible transmission to the financial system.’

He reiterated that the Eurosystem was committed to fully aligning to the Paris Agreement and that actions connected to environmental sustainability and monetary policy were already taking place in the euro area.

‘In July 2022, the European Central Bank announced the incorporation of climate and environmental sustainability considerations into decisions to purchase securities in the corporate sector’, he said, ‘currently underway with the programs decided after the sovereign debt crisis of 2011-12 and in the aftermath of the outbreak of the Covid-19 pandemic (CSPP and PEPP).’