# Climate change fight a ‘core duty’ for central banks – ECB’s Villeroy
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-24
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Climate Change Fight a 'Core Duty' for Central
Meta Description: France's central bank governor François Villeroy de Galhau stresses central banks' role in combating climate change as a must-have focus, not just a
URL: https://financedigest.com/climate-change-fight-a-core-duty-for-central-banks-ecbs-villeroyhtml

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# Climate change fight a ‘core duty’ for central banks – ECB’s Villeroy

By Marc Jones

LONDON (Reuters) – France’s central bank governor François Villeroy de Galhau has pushed back against criticism of central banks’ increasing involvement in the fight against climate change, calling the issue a “must have” focus.

“Climate-related risks are clearly among the long-term risks to which financial institutions are exposed: monitoring these risks is not a ‘nice to have’, or part of a CSR (corporate social responsibility) policy, but a ‘must have’,” Villeroy, who also sits on the European Central Bank’s Governing Council, said in a speech at the City Week conference in London.

On some of the recent concerns voiced by a number of top [central bankers, he added central bankers shouldn’t waste too much time on the legal and political debate about central bank](https://www.financedigest.com/global-central-banks-extend-rate-hike-push-in-november.html "Global central banks extend rate hike push in November") mandates.

[“Central banks’](https://www.financedigest.com/u-s-to-move-3-5-billion-in-afghan-central-bank-assets-to-swiss-based-trust.html "U.S. to move .5 billion in Afghan central bank assets to Swiss-based trust") core mandate worldwide is price stability, and climate change already affects the level of prices and activity,” Villeroy stressed.

It’s not mission creep, it’s not a politicisation of our mandate – it is our core [business and core duty.”](https://www.financedigest.com/make-it-a-budget-for-businesses-abolish-stamp-duty-on-private-share-transactions.html "Make it a Budget for Businesses: Abolish Stamp Duty on Private Share Transactions")

The debate about how much influence [central banks](https://www.financedigest.com/polish-central-bank-holds-rates-points-to-slowdown-ahead.html "Polish central bank holds rates, points to slowdown ahead") can have in tackling climate issues has become increasingly divisive this year.

In January, the head of the U.S. Federal Reserve Jerome Powell, said it should “stick to its knitting” as it was “not a climate policymaker and never will be”.

The Fed’s balancing act has become more delicate since the Republicans took control of the House of Representatives, although both Belgian [ECB policymaker](https://www.financedigest.com/euro-zone-bond-yields-fall-as-ecb-policymaker-flags-recession-risk-gilts-eyed.html "Euro zone bond yields fall as ECB policymaker flags recession risk, gilts eyed") Pierre Wunsch and former Bank of England chief Mervyn King have also said fighting global warming was primarily the job of governments.

Villeroy, however, who has long been a firm advocate of doing more, urged central [banks and others to come up with better models](https://www.financedigest.com/is-this-the-start-of-the-race-to-redefine-the-banking-operating-model.html "Is this the start of the race to redefine the banking operating model?") of how climate change is likely to alter economies.

He said recent “pilot [stress tests”](https://www.financedigest.com/planning-to-move-to-the-low-carbon-economy-how-banks-can-plan-today-for-new-stress-tests-arriving-soon-2.html "Planning to move to the low carbon economy: How Banks can plan today for new stress tests arriving soon") had been carried out and pointed to a need for shorter-term scenarios with a five-year time horizon because climate change was accelerating.

The Network for Greening the Financial System, which most of the [world’s central banks](https://www.financedigest.com/in-a-digital-world-what-is-the-future-for-community-banking.html "In a Digital World, What is the Future for Community Banking?") and multilateral lenders such as the International Monetary Fund are members of, would therefore publish a “conceptual framework” at end of this year, he added.

It is also aiming to release short-term climate change scenarios by the end of 2024, which should show more adverse developments, incorporate tougher “shocks” and directly [explore the potential](https://www.financedigest.com/oil-firms-must-step-up-exploration-off-norway-to-unlock-potential-npd.html "Oil firms must step up exploration off Norway to unlock potential -NPD") impacts of climate change on inflation.

(Reporting by Marc Jones; Editing by Hugh Lawson and Philippa Fletcher)


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