Interview with ECB Vice-Chair on climate policy and financial stability

Frank Elderson, Member of the ECB Executive Board and Vice-Chair of the Supervisory Board, conducted an interview on April 15, 2026, discussing the ECB’s role in climate and financial stability.

He clarified that the ECB is not a policymaker for climate or nature policies, which are the responsibility of elected governments. However, the ECB considers climate and nature crises in its objectives of price stability, financial stability, and sound banking.

Elderson highlighted the impact of climate change on inflation, citing the 2022 Rhine drought that increased food price inflation by 0.7 percentage points. He emphasized the importance of banks managing climate-related risks, such as lending to properties in flood-prone areas or financing water-dependent power plants.

The ECB’s legal obligation to support EU economic policies includes climate and nature considerations. The ECB incorporates climate factors into economic models and collateral valuation, with potential for structural instruments like dual interest rates, though discussions are ongoing.

Regarding banks’ progress, he noted that by the end of 2024, nearly all supervised banks had mapped climate risks, but some gaps remain, particularly in assessing biodiversity loss. The ECB does not decide individual lending but expects banks to manage associated risks responsibly.

He stressed the importance of lessons learned from the 2008 financial crisis, noting reforms that strengthened banks and established a European banking supervision framework. Elderson warned against deregulation and emphasized completing the banking union, capital markets union, and Single Market to enhance financial resilience and integration.

On private credit and shadow banking, Elderson acknowledged the sector’s diversity and growth, emphasizing the need for international supervision and transparency. He warned that regulation must be consistent to prevent regulatory arbitrage and highlighted ongoing efforts to close supervision gaps.

Finally, Elderson expressed his commitment to explaining the importance of climate policy and sound banking, stating he is energized by his role and open to engaging with stakeholders to promote financial stability and sustainability.