Christine Lagarde urges ‘greening’ of EU monetary policy
Christine Lagarde, the candidate to become the next President of the European Central Bank (ECB), has called for a “greening” of EU monetary policy.
Christine Lagarde | Photo credit: European Parliament Audiovisual
Speaking in Parliament on Wednesday, Lagarde also spoke about the need to include “environmental and climate change risks” in future ECB policies.
She was appearing before a packed meeting of Parliament’s Committee on Economic and Monetary Affairs which subsequently backed her nomination.
The committee’s vote is non-binding but politically necessary to go ahead with her formal appointment by EU leaders. The ECB President is appointed for 8 years.
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She is also expected to receive the backing of plenary in Strasbourg in two weeks’ time.
Lagarde, who formerly headed the IMF, spelled out plans for an environmentally-minded ECB, saying, “The discussion on whether, and if so how, central banks and banking supervisors can contribute to mitigating climate change is at an early stage but should be seen as a priority.”
“Climate change is one of the most pressing global challenges facing society today,” she said, adding that the environment and climate “must be at the core” of the ECB’s mission.
Admitting to feeling “intimidated” at the prospect of facing MEPs for her nomination hearing, the vastly experienced Lagarde, eight years head of the IMF, said the relationship between the ECB and Parliament was “the cornerstone” of the EU’s monetary policy.
“The discussion on whether, and if so how, central banks and banking supervisors can contribute to mitigating climate change is at an early stage but should be seen as a priority” Christine Lagarde
She said the principles that had “driven” her during her time at the IMF would, if appointed, guide her in her new job at the ECB.
These include “rising inequalities”, climate change and striving for “more inclusive growth”, she told the committee.
She also specifically cited the “agility to respond to new challenges” and a “commitment” to the ECB’s mandate as key priorities.
“But,” she added, “this is not just about setting priorities but also about listening to all voices.”
In a ten-minute opening address, Lagarde noted that since 2013 some 11 million new jobs had been created in the eurozone but added that the area “still faces near-term risks” and “new types” of challenges, including climate change and low bank profitability.
Limiting social dumping, “greening” the financial system and completing the single market were other challenges she outlined.
In order to address such issues, it was vital that the ECB’s policies are “forward thinking,” she told the hearing.
“The Eurozone must come off steroids. Ms Lagarde must explain how she wants Europe to get away from cheap money” Markus Ferber MEP
Utilising “innovative instruments” was also required, she told MEPs.
“In all of this, the role of this Parliament, as a co-legislator, will be instrumental.”
She added, “Yes, we all focus on our national interests, but the European dimension is critical.”
In a long Q&A session with MEPs her nomination was welcomed by German Greens member Sven Gielgold who told her, “The ECB is the most powerful economic institution in the world and it saved the euro. The financial world is male dominated so I welcome the fact that the ECB could be headed by a woman.”
He added, “I agree on the need to green monetary policy but, under your leadership, I hope this will be stronger and bolder.”
German EPP member Markus Ferber said Lagarde “must make it very clear that it is not the job of the European Central Bank to boost the economy, but to safeguard the value of the Euro and keep prices stable - nothing else”.
Ferber, the EPP spokesman on Economic and Monetary Affairs, said he expects Lagarde to stop the “ultra-easy monetary policy of the past years.”
“The Eurozone must come off steroids. Ms Lagarde must explain how she wants Europe to get away from cheap money”, Ferber said.
“Mario Draghi’s policy disguised many structural economic problems in some parts of Europe. It is better to solve problems than disguise them”, said Ferber, criticising the current President of the Central Bank.
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