Sweden Wants Riksbank to Identify Climate Threats, Expand Focus

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The Swedish central bank will by law have to identify threats against sustainable development and consider issues such as employment when it conducts policy, according to a government proposal.

Climate change could become a long term threat “to economic development broadly, as well as stability in the financial system,” according to the proposal for a new Riksbank Act, which stops short of including climate policy in its monetary policy mandate.

Price stability remains the primary goal of the Riksbank, while the bank should also take production and employment into account, when it’s possible to do so without jeopardizing the main target, according to the proposal.

Central banks are considering ways to help fight climate change without being dragged into political battles that could undermine their independence. The European Central Bank has included the issue in a sweeping strategy review that will be concluded later this year.

U.K. Chancellor of the Exchequer Rishi Sunak this year said the Bank of England’s mandate would be updated to “reflect the importance of environmental sustainability” and the country’s ambition reach net-zero emissions of greenhouse gases by 2050.

Sweden’s proposals urges the bank to analyze and initiate discussions on climate change and sustainability after criticism from a the Swedish Climate Policy Council that the issues were largely absent from previous drafts.

The draft also reduces the number of the bank’s executive board members to 5 from 6, in line with earlier proposals.

Governor Stefan Ingves has repeatedly criticized the draft. Earlier this year, he said the planned amendments “would make the Riksbank very different from other central banks,” and limit its capacity to carry out its tasks.

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