The latest ECB climate stress test shows that banks could face a wave of insolvencies on their mortgage lending as energy-inefficient homes make their clients vulnerable to higher energy prices. Banks’ unpreparedness to collect data on the energy efficiency of their real estate exposures exacerbates this risk even more. This is a wake-up call for the EU and governments to urgently strengthen supervision and oblige banks to unlock finance for the renovation wave.
The European Central Bank (ECB) finally announced a clear shift away from its sacrosanct “market neutrality” principle, as it will introduce green criteria in its rules for corporate bond purchases and refinancing operations. While this is a significant improvement, the introduction of these measures remains slow and applies to only 5.87% of the ECB’s balance sheet.
A new study traces how climate change became a topic in Europe’s monetary policy. Utilising a novel and extensive dataset, it shows how the European Parliament, early on, called for a greener monetary policy and eventually allied with members of the ECB to forge a consensus on monetary policy and climate change. The study was financially supported by Positive Money Europe and authored by Dr. Elsa Massoc, a postdoctoral researcher at the Center for the Advanced Studies of Law and Finance.
Despite its decision to start raising interest rates, the European Central Bank President Christine Lagarde signaled an interest in introducing a “green TLTRO” system – a reference to Positive Money Europe’s proposal which is now making a comeback in the debate.
ECB watchers join Positive Money Europe’s push for a green lending program.
A recording of Positive Money Europe’s latest webinar is now available. What role can the banking sector play in the Renovation Wave? How can the European Central Bank unlock affordable green loans and green mortgages? Our experts answered these questions.