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ECB’s Elderson opens door to ‘green’ loans to banks

The European Central Bank should consider taking climate-related criteria into consideration if it launches a new round of multi-year loans for banks in the future, ECB board member Frank Elderson said on Wednesday.

His comments will likely pleaseeconomists andactivists who have been clamouring for such a move, but action is unlikely to follow any time soon as the ECBhas discontinued its long-term loans for banks as part of itsfight against inflation.

“Whenever there is a monetary policy need in the future to reconsider targeted longer-term refinancing operations for banks, there are compelling reasons to seriously consider greening them,” Elderson told an audience.

As a precedent, he cited past Targeted Longer-Term Financing Operations (TLTRO) that provided cheap funding for banks that did not shrink their loan book but excluded mortgages from the calculation so as not to add fuel to aproperty bubble.

“Similar targeting strategies can be considered to support green lending or exclude non-green lending in the future, provided an operationally efficient validation process is feasible,” Elderson said.

He also favoured buying more bonds from European Union agencies, rather than member countries, because they include “a relatively large proportion” of green bonds.
Source: Reuters (Reporting By Francesco Canepa; Editing by Toby Chopra, Alexandra Hudson)

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