Stability Through Sustainability: Three Recommendations for the ECB’s 2025 Monetary Policy Strategy Review
In January 2025, 41 civil society organizations published a manifesto calling on the European Central Bank (ECB) to adopt measures to green its monetary policy. This year, the ECB will conclude a review of its monetary policy strategy. This provides the ideal opportunity to update the central bank’s “Climate Roadmap” adopted four years ago. Indeed, while this first Roadmap clearly acknowledged the fact that climate change was relevant to the ECB’s mandate and monetary policy, its impact on monetary operations has been limited. Several measures have been sidelined and/or became largely irrelevant in a changing economic context.
The signatories of the manifesto underline that:
- The ECB’s failure to take concrete action on climate and nature would be a failure to ensure price and financial stability.
- Given economic developments and improved climate and nature expertise since the previous review, new policy measures are now urgent and feasible.
- The ECB’s next moves on climate and nature could significantly impact the EU’s ability to achieve an orderly and just transition.
They call on the ECB to implement measures on three pillars of monetary policy: refinancing operations, the collateral framework and monetary portfolios (asset purchases). First, the ECB should put in place targeted lower interest rates to support the green transition. Second, the ECB should update its collateral framework to end its implicit support to environmentally harmful activities, such as fossil fuel extraction and deforestation. Finally, the ECB should consider how to green its monetary portfolios despite the end of quantitative easing, notably by applying exclusions to its stock of assets.
In addition to this manifesto, the signatories addressed an Open Letter to members of the ECB Governing Council. This letter was also signed by 20 experts that support the same demands. Read the open letter.