ECB’s Elderson: Nature-Related Risks Could Have Implications for Price Stability

6 September 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Frank Elderson on Friday said that the degradation of nature could impact price stability as it led to increased vulnerabilities in the economy and financial system.

In a speech at the ESBC (European System of Central Banks) Legal Conference in Frankfurt, the text of which was posted on the website of the ECB, Elderson said, ‘[C]entral banks and supervisors also need to consider the nature crisis as a source of risk to the economy, financial system and the individual banks they supervise.’

Nature-related risks should not be ignored and should be assessed by central banks in the context of their monetary policy mandate, since ‘the nature crisis could have direct implications for price stability’, he said.

In that context, insights from nature science could be transposed into economic variables, such as growth, inflation and financial risks, he suggested.

‘Time is running out to prepare for the materialisation of nature-related risks’, he said. ‘We need to be ready for the impact of these risks, just like we are for climate-related risks – or indeed for any other risk driver.’