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Riksbank Governor: Limited Scope for Green Investments

Riksbank Governor Sees Limited Scope for More Green Investments

(Bloomberg) -- Sweden’s central bank would only be able to adopt a more radical approach to green investing if the regulatory framework within which it operates were changed, according to Governor Stefan Ingves.

The Riksbank took a stand on climate change last year when it divested bonds issued by Australian and Canadian states with high carbon-dioxide emissions.

The decision followed criticism leveled against the Riksbank that it wasn’t doing enough to tackle climate change. Ingves says that under its current mandate, the bank can’t do “a whole lot more” than it’s already done.

Riksbank Governor: Limited Scope for Green Investments

“We hold a currency reserve for reasons that are very different,” Ingves told reporters after a parliamentary hearing in Stockholm on Tuesday. “It’s hard to imagine that creating a kind of green portfolio would be included in the central banks’ tasks. That would require regulatory changes.”

There’s growing debate around the role that central banks should play in shaping the global fight against climate change. The most recent appointment to the Riksbank board, Anna Breman, has argued that the bank ought to consider buying green corporate and government bonds.

The Riksbank has said it will give consideration to sustainability aspects when choosing what assets to invest in. But it hasn’t yet specified exactly how those considerations should shape investment decisions.

The Riksbank announced its divestment of Canadian and Australian bonds in November. Back then, Deputy Governor Martin Floden said that although foreign reserves could be adjusted to make the portfolio more sustainable, no distinction should be made between Sweden’s green government bonds and the country’s other sovereign debt issues.

Ingves said climate change isn’t the main issue for central banks to tackle when setting policy. But he acknowledged that central bankers need to understand how global warning will affect economies and financial markets.

“These questions will be relevant for a very long time and I expect that there will be a discussion throughout society about who does what and how, and about what central banks should do,” Ingves said. “For us, the main task is to follow the development and to make sure that we understand what this means for the economy in a wide sense.”

To contact the reporter on this story: Niclas Rolander in Stockholm at nrolander@bloomberg.net

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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