ECB to adapt collateral framework to address climate-related transition risks
www.ecb.europa.eu
The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
  • The European Central Bank (ECB) is set to introduce what it calls a ‘climate factor’ when lending to banks against appropriate collateral in their short and long-term financing instruments.
  • This climate factor could reduce the value assigned to the assets pledged as collateral, thus protecting the Eurosystem against a potential decline in collateral value in the event of climate-related shocks.
  • The climate factor also raises the pressure on commercial banks to direct their funds towards ‘greener’ investments as the bloc seeks to reduce it carbon footprint.
  • The new measure will apply to marketable assets issued by non-financial corporations, taking effect in the second half of 2026.
  • Avid Amoeba@lemmy.caEnglish
    6·
    4 days ago

    Wow this would have been nice in 1991. I guess the next best time is now. Would be nice if this starts a trend among central banks to exercise more fine grained control over banks other than purey monetary policy.

  • plyth@feddit.orgEnglish
    2·
    4 days ago

    “climate factor” which could reduce the value assigned to eligible assets pledged as collateral, depending on the extent to which an asset can be impacted by these uncertainties.