ECB's Elderson Advocates Holding Greater Share of EU Supranational Bonds

4 October 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Frank Elderson said on Friday that the ECB should consider holding a larger share of EU supranational bonds.

In a speech at the Sustainable Finance Lab Symposium on Finance in Transition, Elderson said that the ECB should take into account the importance of green bonds in new EU debt issuance.

‘We should contemplate increasing the share of EU supranational bonds in our total bond holdings to minimise potential climate and nature-related risks and to better align our balance sheet with the general economic policies in the EU’, he said.

This would be appropriate if the ECB were to contemplate new asset purchases ahead, according to Elderson.

‘[I]t is also relevant for the composition of the structural bond portfolio that will be part of our new operational framework, as announced earlier this year’, he added.

If the ECB were to conduct targeted longer-term refinancing operations (TLTROs) again in the future, ‘there are compelling reasons to seriously consider greening these TLTROs’, he said.

The ECB had designed previous instruments to take financial stability concerns into consideration, he said.