Coeure Says Central Banks Can’t Lead the Climate Change Fight

(Bloomberg) --

Central banks can’t be at the forefront of the fight against climate change but they can help, outgoing European Central Bank board member Benoit Coeure cautioned on Thursday, saying the scope of action is limited by their mandates.

Speaking to economics students in Paris, Coeure acknowledged that climate change -- which he called an emergency -- was “perhaps the most far-reaching” of the challenges facing their generation. Central banks are behind the curve on how to account for its consequences, he said.

“This is and should remain a political task,” he told the audience. “At any rate, climate change will affect the conduct of monetary policy in one way or another.”

The ECB is increasingly finding itself under pressure to join the fight against climate change. In an open letter to President Christine Lagarde on Thursday, academics and civil-society groups urged the central bank to ditch bonds of climate polluters from its balance sheet. She has already signaled that she intends to look at what role monetary policy can play in fighting climate change in an upcoming strategy review.

The comments from Coeure, whose term ends on Dec. 31, reflect concern in the ECB that its price-stability mandate could be undermined if it tries to include climate change in monetary policy. Such sentiment has already been expressed by Bundesbank President Jens Weidmann.

Still, Coeure said that without further mitigation of climate change “it will become increasingly difficult for central banks to disentangle the variation in the data underlying the assessment of the medium-term inflation outlook.”

©2019 Bloomberg L.P.