Central Banks Can’t Fix Climate Change, Czech Policy Maker Says

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Central banks shouldn’t try to fight climate change, as doing so could endanger financial stability and undermine their independence, a top Czech monetary official said.

Marek Mora, a deputy governor of the Czech National Bank, said regulations can’t be used to benefit banks financing projects aimed at fighting global warming or penalize those that don’t. Central banks “shouldn’t create the perception that they’re omnipotent,” and they must leave environmental policies to elected leaders, he said in a video blog published on Thursday.

The comments contrast with those of prominent global monetary-policy officials who’ve advocated helping the world fight the environmental crisis. European Central Bank President Christine Lagarde, for example, has pledged to pursue “every avenue” to confront climate risks.

According to Mora, modern central banks were created with “enormous power” to safeguard price stability and, in turn, help achieve long-term economic sustainability.

“The moment when we start allocating resources to segments like fighting climate change, I think that would undermine this initial legitimacy,” Mora said.

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