Greening Central Banks’ activities: a possible solution to tackle climate change?
"Grey, dear friend, is all theory, And green the golden tree of life.”
This quote from “Faust” by J.W. Goethe has served as introductory words by Yves Mersch, member of the Executive Board of the European Central Bank (ECB) during a workshop at the ECB on 27 November 2018 . Greening central banks’ activities has been an important issue in the actual debate for tackling climate change. The recent appointment of Christine Lagarde, former director of the IMF, at the head of the ECB has revived the debate. In fact, the new director defends that central banks must play a central role in the fight against climate change, declaring that the mission was “critical”. This position, although popular, is not unanimous among economists and central bankers. The President of the Bundesbank, Jens Weidmann, for example, is very critical of attempts to use monetary policies to fight climate change, preferring to keep a traditional role for these policies . The Federal Reserve (Fed) has also recently stated that environmental issues were not taken into account in its year-long strategic review. But the new ECB director is not known to think inside the barrel.