ECB’s Schnabel wants bond-buying green tilt

imageEconomy38 minutes ago (Jun 14, 2021 09:51AM ET)

(C) Reuters. FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski//File Photo

FRANKFURT (Reuters) -The European Central Bank could tilt its purchases of corporate bonds towards companies that pollute less or are cutting their emissions, ECB board member Isabel Schnabel said in a speech on Monday.

Central bankers in the euro zone and around the world are debating what their role should be in the fight against climate change.

Schnabel, an advocate of taking environmental considerations into account when carrying out the ECB’s massive bond-buying stimulus programmes, said excluding polluters altogether would remove an incentive for them to clean up their acts.

“Another possibility would be to pursue a more sophisticated ’tilting strategy’ under which the ECB could adjust its monetary policy operations more gradually in line with sustainability considerations,” Schnabel said.

This would mean buying more green bonds and — because this market is still small — favouring “issuers that have a clear path and commitment to reducing their greenhouse gas emissions”, she added.

Under its quantitative easing programmes the ECB has been buying corporate bonds in proportion to their outstanding amounts, an approach that Schnabel said favours carbon-intensive companies and should be replaced.

Her camp scored a significant victory earlier this month, when Bundesbank President Jens Weidmann dropped his opposition to buying fewer bonds from polluting companies.

ECB policymakers are debating the matter as part of a strategic review which they aim to complete by the autumn.

ECB’s Schnabel wants bond-buying green tilt

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

About the author

Related

JOIN THE DISCUSSION