{"id":35514,"date":"2025-01-28T01:00:53","date_gmt":"2025-01-28T00:00:53","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=35514"},"modified":"2025-01-28T17:07:05","modified_gmt":"2025-01-28T16:07:05","slug":"open-letter-to-the-ecb-governing-council-calling-on-greener-monetary-policy","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2025\/01\/28\/open-letter-to-the-ecb-governing-council-calling-on-greener-monetary-policy\/","title":{"rendered":"Open letter to the ECB Governing Council calling on greener monetary policy"},"content":{"rendered":"

More than 40 civil society organizations and 20 experts signed an open letter calling on the European Central Bank (ECB) to green its monetary policy this year. The signatories emphasize the need to rethink the outdated climate and nature approach of the central bank and implement concrete measures to support the green transition whilst contributing to price and financial stability. In addition to the Open Letter, the civil society organizations wrote a manifesto detailing these measures needed to decarbonize refinancing operations, the collateral framework and monetary portfolios.<\/p>\n<\/div>

Dear members of the European Central Bank Governing Council,<\/p>\n

Four years ago, the European Central Bank (ECB) adopted its Climate Roadmap as part of a monetary policy strategy review (1). This marked a welcome turn in how climate change was considered by central banks across the Eurosystem and integrated into their activities. But times have changed, bringing a new set of opportunities and challenges along the way for the Governing Council to consider.<\/p>\n

Central banks\u2019 understanding of the link between climate change and monetary policy has improved, various climate stress tests have been carried out, (2) and deadlines were set for banks to meet climate-related risk expectations (3). European central banks have also recognised the need to extend the initial focus on climate to a more holistic approach also encompassing nature degradation and biodiversity loss (4).<\/p>\n

At the same time, the ECB\u2019s green agenda has experienced significant hurdles. High inflation, caused by Europe\u2019s dependency on fossil gas, transformed the economic context and monetary policy operations. Asset purchases, once abundant, are now being phased out, effectively ending the climate tilting policy introduced in the Roadmap (5). Interest rates were raised to a restrictive stance, harming green investment and hampering the energy transition (6).<\/p>\n

Yet, the ECB has repeated that a faster and orderly transition is essential for price and financial stability (7). Furthermore, as climate change and nature degradation intensify, so will their impact on monetary policy and the whole financial system. And, maintaining our fossil fuel dependency leaves us vulnerable to future price shocks.<\/p>\n

In light of the situation, we urge you, the ECB Governing Council, to put forward a new and improved Climate Roadmap as part of the monetary policy strategy assessment to be concluded in 2025. Concrete measures that should be introduced include updating the collateral framework, tilting the stock <\/i>of securities in the asset portfolios, and introducing green lending facilities (as explained in the Manifesto Stability Through Sustainability: three recommendations for the ECB\u2019s 2025 Monetary Policy Strategy Review<\/i><\/a><\/span>)<\/i>. We stress that, by implementing these measures, the ECB\u2019s monetary policy would more effectively fulfil its primary mandate. Additionally, it would be more aligned with its secondary objective to support the EU\u2019s economic goals, which include the green transition and sustainable economic growth.<\/p>\n

The ECB is at a crossroads. It can take satisfaction in its progress thus far, leaving a gulf of ambition to the true scale of the challenge. Or it can use that progress as a stepping stone towards developing a monetary policy strategy fit for ensuring stability in the face of the nature and climate crises. Although governments should lead on environmental policies, the ECB has a responsibility to mobilise monetary policy to integrate climate and environmental risks and support the green transition to uphold its mandate.<\/p>\n

We, the undersigned, hope you will consider our demands when reviewing the ECB monetary policy strategy. We stand ready to contribute constructively to this work, within our expertise.<\/p>\n<\/div>

Signatures from organizations<\/span><\/b><\/p>\n