Germany’s CDU Economic Council rejects ECB role in climate action

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The German business association CDU Economic Council, associated with Angela Merkel’s Christian Democratic Union (CDU) party, opposes plans by the European Central Bank (ECB) to make climate action a key element of the bank’s monetary policy activities, Frank Matthias Drost writes in Handelsblatt. “Climate action is a political task. The ECB does not have a mandate for that,” said the council’s secretary general, Wolfgang Steiger. He warned in particular against the ECB favouring green bonds in the context of its bond purchase programme, arguing that this would violate market neutrality principles and amount to “pure industrial policy”. According to Steiger, a climate policy intervention would open the door to other politically motivated activities that member states might attempt to impose on the central bank and “trap it in the role of the states’ bankroller”.

Christine Lagarde, the new ECB head, recently said climate action should be made a central bank task, as economic disruption caused by global warming would also touch upon the ECB’s key mandate of guaranteeing price stability. The head of Germany’s national central bank Bundesbank, Jens Weidmann, has rejected the idea, also citing a possible violation of market neutrality by the European bank as the major obstacle.

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