Governing Council defines future strategy

For the first time since the outbreak of the pandemic, ECB President Christine Lagarde met physically with the Governing Council. It was about the really big questions.

ECB President Christine Lagarde and the ECB Council at their closed meeting in the Taunus.

Dhe Governing Council, the highest body, the European Central Bank (ECB), discussed its future strategy at a closed meeting in Taunus. The central bank announced on Sunday that the first physical meeting of the top central bankers in the eurozone since the beginning of the pandemic outside the gates of Frankfurt had been successful without publishing concrete results.

“The Governing Council will publish the outcome of the strategy review after the formal decision has been taken,” said ECB President Christine Lagarde. Participants learned that the future inflation target of the central bank had recently been converged. The old target of “below, but close to 2 percent” should probably become a simple goal of 2 percent, which is then understood symmetrically – that is, falling below the target would be combated in the same way as overshooting.

Greener alignment

A stronger anchoring of climate protection in the so-called “secondary mandate” of the ECB had also been discussed. The primary goal of the ECB is price stability, but as a “secondary goal” it should also support the general economic policy of the European Union. Unlike the Japanese central bank, the ECB thinks less about financial aid for “green” companies through the banks.

Rather, on the one hand, there is discussion about taking climate risks of individual bonds into greater account in the monetary policy bond purchase program; On the other hand, it is discussed whether the central banks’ criteria for bond purchases as a whole currently structurally favor companies with high CO2 emissions and whether these criteria must therefore be changed. Bundesbank President Jens Weidmann is of the opinion that if the rating agencies do not include climate risks in their ratings quickly enough, the central bank could limit the maturities or the number of bonds from certain sectors or issuers.

ECB Executive Board member Isabel Schnabel is of the opinion that the central bank’s previous criteria for bond purchases, such as the volume of outstanding bonds, may inappropriately favor companies with high CO2 emissions. This criticism had previously been presented by the environmental organization Greenpeace, among others.

ECB President Lagarde said after the meeting that it was good to meet again in person. “The hilly landscape of the Taunus was ideal to get in touch again after months in which we only met digitally,” said Lagarde: “I am pleased that we were able to hold in-depth discussions at our closed meeting and that we were able to clarify the situation have made good progress with our future monetary policy strategy. “

ALyo Natour