Forex News

In the famous fable “Belling the Cat”,[1] a group of mice gather to discuss how to deal with a cat that is eating them one by one. They hatch a plan to put a bell on the cat so they can hear it coming and escape before being caught. When it comes to who will actually do it, however, each mouse finds a reason why they are not the right mouse for the job, and why another mouse should do it instead. The cat never does receive a bell – and the story ends poorly for the mice. In many ways, that fable describes mankind’s reaction to the threats posed by climate change. Already in 1986, the front cover of Der Spiegel showed Cologne cathedral half-submerged by water and the headline declared a “Climate Catastrophe”.[2] This is just one example, among many, that demonstrates that people were aware of the risks posed by climate change a generation ago. Yet, while many people agreed on the seriousness of the issue, and that something had to be done, concrete action has been much less prevalent. It is with this history in mind that I want to talk about the role of central banks in addressing climate change. Clearly, central banks are not the main actors when it comes to preventing global heating. Central banks are not responsible for climate policy and the most important tools that are needed lie outside of our mandate. But the fact that we are not in the driving seat does not mean that we can simply ignore climate change, or that we do not play a role in combating it. Just as with the mice in the fable, inaction tweet at 3:48am: ECB'S LAGARDE SAYS WE ARE NOW LAUNCHING A NEW CLIMATE CHANGE CENTRE SAYS CLIMATE CHANGE COULD POTENTIALLY CAUSE A DURABLE DIVERGENCE BETWEEN HEADLINE AND CORE MEASURES OF INFLATION AND INFLUENCE THE INFLATION EXPECTATIONS OF HOUSEHOLDS AND BUSINESSES