![]() ![]() This is not “mission creep”, it is simply acknowledging reality. This increased action is often considered as a source of transition risk, which we need to take into account and reflect in our policy framework. We are seeing a new political willingness among regulators and fiscal authorities to speed up the transition to a carbon neutral economy, on the back of substantial technological advances in the private sector. That said, there are now signs that policy action to fight climate change is accelerating, especially in Europe. An analysis of over 300 peer-reviewed studies of disasters found that almost 70% of the events analysed were made more likely, or more severe, by human-caused climate change. The number of disasters caused by natural hazards is also rising, resulting in $210 billion of damages in 2020. Globally, the past six years are the warmest six on record, and 2020 was the warmest in Europe. Just as with the mice in the fable, inaction has negative consequences, and the implications of not tackling climate change are already visible. But the fact that we are not in the driving seat does not mean that we can simply ignore climate change, or that we do not play a role in combating it. Central banks are not responsible for climate policy and the most important tools that are needed lie outside of our mandate. Clearly, central banks are not the main actors when it comes to preventing global heating. ![]() It is with this history in mind that I want to talk about the role of central banks in addressing climate change. Yet, while many people agreed on the seriousness of the issue, and that something had to be done, concrete action has been much less prevalent. This is just one example, among many, that demonstrates that people were aware of the risks posed by climate change a generation ago. Already in 1986, the front cover of Der Spiegel showed Cologne cathedral half-submerged by water and the headline declared a “Climate Catastrophe”. In many ways, that fable describes mankind’s reaction to the threats posed by climate change. The cat never does receive a bell – and the story ends poorly for the mice. When it comes to who will actually do it, however, each mouse finds a reason why they are not the right mouse for the job, and why another mouse should do it instead. They hatch a plan to put a bell on the cat so they can hear it coming and escape before being caught. In the famous fable “Belling the Cat”, a group of mice gather to discuss how to deal with a cat that is eating them one by one. Keynote speech by Christine Lagarde, President of the ECB, at the ILF conference on Green Banking and Green Central Banking ![]()
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