Joint call for 21st Century Central Banking

Promising to some - a nightmare for others: should the ECB care about climate and justice? Experts have tried to work out what this might look like in a joint call.




26. APRIL 2021



Formally, it is still true that a central bank like the European Central Bank should basically only pursue one goal: price stability. In practice, this has long been different, write a number of experts and other critics in a joint appeal on the initiative of the citizens’ movement Finanzwende and the Heinrich Böll Foundation. Therefore, it is urgent to formally adapt the mandate to the new challenges.

According to the authors, the old assumption of current economic models that monetary policy is neutral is illusory. In reality, the central bank’s interest rate policy influences the distribution of wealth, as it does at present. And it also has an influence on climate change if the central bank buys bonds from companies that do business in a climate damaging way. The current mandate with its strong focus on price stability does not do justice to all this. What is needed is a mandate that fits the central bank’s tasks of the 21st century.

The appeal therefore calls for the democratic legitimacy of the ECB to be strengthened and its mandate to be defined more precisely. One demand, for example, is for the European Parliament to define and prioritise the political objectives of ECB policy beyond its primary mandate through a formal procedure.

The appeal was drafted by renowned economists such as Adam Tooze and Daniela Gabor.

The article was published as guest contribution in the “Tagesspiegel”. A more detailed version can be found here.



More than a decade after the financial crisis there still seems to be something seriously wrong with the financial system. Financial markets still tend to periodically misprice risk and contribute to boom and bust cycles. A better financial system needs to discourage short-termism and speculative activity, curtail systemic risk and distribute wealth more broadly.