Banking on a Hotter Planet: Climate Policy at the ECB with Irene Heemskerk

Banking on a Hotter Planet:
Steering Climate Policy at the European Central Bank with Irene Heemskerk

A mandate is changeable – the climate crisis isn’t. From the euro crisis to the pandemic, the European Central Bank has repeatedly expanded its toolkit in response to moments of stress. Yet mounting climate and nature degradation introduce far more systemic shocks. The environment in which central banks pursue their mandates is only getting hotter, and more volatile. Per the words of Naomi Klein: “The new normal is serial disasters: economic and ecological.”

What does this mean for the institutions tasked with safeguarding economic stability? In this discussion, Irene Heemskerk, Director of the ECB’s Climate Change Centre, examines how the ECB models these risks, how they interact with the price stability mandate, and whether existing policy instruments are fit for purpose.