ECB’s Elderson: Climate Change Poses Serious Theat to Economic Stability

27 March 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – Climate change constitutes a grave danger to the stability of economies and the financial system, European Central Bank Executive Board member Frank Elderson said on Wednesday.

Global warming and the human disregard for the environment endanger natural capital and will foster macroeconomic instability in a world increasingly subject to adverse climate and nature events, he said at a conference on climate-related financial risks in Rio de Janeiro.

'And central banks and supervisors around the world recognise that this poses a serious threat to the stability of our economies and the robustness of our financial system', he said.

According to Elderson, a successful transition to a green and sustainable economy would demand vast investment flows that would reshape the way economies function.

‘We are looking at setting limits on the share of assets issued by entities with a large carbon footprint’, he said.

Elderson pointed out that it is expected for all the banks under ECB supervision to be fully aligned with the ECB supervisory expectations by the end of the year. ‘We will enforce this final deadline as well as several interim deadlines’, he said.

Taking climate and nature into account in the pursuit of monetary policy is crucial for central banks, he said.