Important steps taken by @ecb to incorporate climate change in its monetary policy operations

Principles are going in right direction, but concrete implementation must have teeth to effectively support the transition and address climate risks in ECB balance sheet

Thread below

https://twitter.com/ecb/status/1543882837941784576

Benchmark for corporate bond reinvestment will be be based on backward (emissions: Scope 1+2 at the firm level + Scope 3 at sector level) + forward looking (reduction targets) data

Delta allocation weight between polluting and sustainable firms is key for measure to have impact!

The @ecb will accept sustainability-linked bonds as collateral for Eurosystem credit operations and asset purchases. What does it mean and is it important for the transition to a low-carbon economy?
Analysis in thread below
(1/7)

https://twitter.com/ecb/status/1308375962933956612

Sustainability-linked bonds are tied to specific social or environmental goals which, if not met, oblige companies to step up their interest payments. They thus introduce a financial incentive for companies to achieve environmental goals
(2/7)
sustainalytics.com/sustainable-fi…

#centralbank urgently need to update their risk management to ensure the transition to a #sustainable post-#COVID19 economy!
New @CEPweb blog and its thread below
(1/6)
cepweb.org/the-transition… Pandemic and environmental crises profoundly modify demand and supply for some goods and services.
This radically reshuffles firms' asset values on financial markets and creates substantial financial risks.
See @NGFS_ for the case of climate change
(2/6)
ngfs.net/sites/default/…

The @ecb response to #COVID19.

My new blog (link below) and a thread on what #centralbanks should do to face the crisis

(1/9)

https://twitter.com/CEPweb/status/1243508910843101187

In short
- Households & firms need massive emergency #credit to cope with #COVID19
- #centralbanks are critically accommodating credit markets
- CBs must guarantee sustainable credit conditions
- CBs must ensure that credit go where it's needed
- #HelicopterMoney is option
(2/9)

(1/5) #ClimateCrisis : what lessons from the #COVID19 crisis?
Excellent interview from philosophe @bourg_d on @RadioTeleSuisse (in French). My take-aways below (in English)
rts.ch/play/radio/le-… (2/5) #COVID19 crisis highlights the fragility of our economies to disruptions. The destabilisation of ecosystems by #ClimateChange - which is under way - is also a source of disruptions for our economic systems - maybe less violent than an epidemy, but which will last for years.

(1/4) Today, the @ecb Governing Council has tasked the relevant Eurosystem Committees with examining options […] such as the design of a tiered system for reserve remuneration and […] the size and composition of potential new net asset purchases
ecb.europa.eu/press/pr/date/… @ecb (2/4) Integrating the environmental risks outlined by the @nfgs_ (of which the @ecb is a member) and ensuring that these options are aligned with the transition to a low-carbon economy is critical and should be on top of @ecb’s agenda, including…
banque-france.fr/sites/default/…

The IMF's evaluation office looked at IMF advice on unconventional monetary policies (UMP). This thread summarizes its conclusions regarding UMP and #inequality.
(1/4)

Full report: ieo.imf.org/en/our-work/ev…
Background paper on UMP and inequality: ieo.imf.org/~/media/IEO/Fi… Distributional effects of UMP:
"While UMP may have helped close output gaps on average, it may do so by helping some and hurting others, viz., it may have distributional effects that could exacerbate inequality, particularly of wealth."
(2/4)

Gloomy perspectives for Swiss banking sector in the new @SNB_BNS Financial Stability Report?
Some key excerpts and comments in this thread
(1/7) Macroeconomic Environment
- Prolonged period of low interest rates carries risks for global financial stability
- Signs of stretched valuations on real estate and stock markets, as well as deteriorating lending standards in several countries
(2/7)

The @bankofcanada is taking climate financial risk seriously!
Climate change is one of the six vulnerabilities of the financial system that are assessed by the Bank in its new Financial System Review.
Some interesting excerpts in the thread below (1/4)
bankofcanada.ca/2019/05/openin… "The necessary adjustments [to transition to a low-carbon economy] are complex and pervasive and might lead to increased risk for the financial system. In addition to insurance companies, many other parts of the financial system are exposed to risks from climate change." (2/4)