Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

ECB's Schnabel wants bond-buying green tilt

Published 14/06/2021, 14:52
Updated 14/06/2021, 14:55
© Reuters. FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski//File Photo

© Reuters. FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski//File Photo

FRANKFURT (Reuters) - The European Central Bank could tilt its purchases of corporate bonds towards companies that pollute less or are cutting their emissions, ECB board member Isabel Schnabel said in a speech on Monday.

Central bankers in the euro zone and around the world are debating what their role should be in the fight against climate change.

Schnabel, an advocate of taking environmental considerations into account when carrying out the ECB's massive bond-buying stimulus programmes, said excluding polluters altogether would remove an incentive for them to clean up their acts.

"Another possibility would be to pursue a more sophisticated 'tilting strategy' under which the ECB could adjust its monetary policy operations more gradually in line with sustainability considerations," Schnabel said.

This would mean buying more green bonds and -- because this market is still small -- favouring "issuers that have a clear path and commitment to reducing their greenhouse gas emissions", she added.

Under its quantitative easing programmes the ECB has been buying corporate bonds in proportion to their outstanding amounts, an approach that Schnabel said favours carbon-intensive companies and should be replaced.

© Reuters. FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski//File Photo

Her camp scored a significant victory earlier this month, when Bundesbank President Jens Weidmann dropped his opposition to buying fewer bonds from polluting companies.

ECB policymakers are debating the matter as part of a strategic review which they aim to complete by the autumn.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.