On climate, jobs and financial stability: Towards a new mandate for central banks?

Whether the ECB needs a new mandate was discussed on the VIII. New Paradigm Workshop by Isabel Schnabel, Adam Tooze, Moritz Schularick, and Laurence Tubiana.




28. MAY 2021


1 MIN.

There was a time when the world still seemed a good – and above all simple – place for monetary authorities. Every few weeks, they had to decide whether, in view of the latest price developments, it would be better to raise the key interest rates by a quarter point – or not. That was a long time ago. Today, central bankers are in demand whenever banks are in crisis or investors flee government bonds. What’s more, they could even help save the climate, ECB chief Christine Lagarde admits.
Don’t the monetary guardians need a new mandate right away? This highly sensitive question was the subject of day 3 of the VIII. New Paradigm Workshop.

ECB Director Isabel Schnabel gave a keynote speech on the extent to which central banks can (co-)bear social responsibility – without losing their independence. You can reread the whole speech here.

Afterwards, Adam Tooze raised the question of whether the ECB might not be best served with a new mandate – because it has no choice but to worry about the stability of financial markets, the drifting apart of wealth, or saving the climate. In the Forum study he presented, Moritz Schularick described how the guiding principles and paradigms of central banks can change. Both studies will soon be published on our website. The discussion was moderated by Laurence Tubiana, professor of economics and CEO of the European Climate Foundation.

The whole session



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.