François Villeroy de Galhau: The role of central banks in the greening of the economy

Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the 5th edition of the Rencontres on "Climate Change and Sustainable Finance", organised jointly with Option Finance. Paris, 11 February 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I would like to welcome you to the Banque de France for this 5th edition of the Rencontres on "Climate Change and Sustainable Finance", organised jointly with Option Finance. Central banks' commitment to the climate cause may seem obvious today, and this despite the urgency of addressing the Covid pandemic.  But it was not the case five years ago, and few issues have seen such a rapid and massive change in mindset and initiative. At the Banque de France and increasingly within the Eurosystem, we are driven by a simple but tenacious ambition: to do our utmost to support and add to the collective action in the fight against global warming. We cannot do everything – nothing will replace an appropriate carbon price and therefore, let me be clear, a carbon tax in one form or another. But we can do a lot. The Banque de France spearheaded the creation of the Network for Greening the Financial System (NGFS), which was launched in Paris in December 2017 and is chaired by our Dutch colleague Frank Elderson. This network – which has already achieved a lot regarding the supervision of banks and insurance companies – now counts more than 80 members, including the US Federal Reserve since 15 December 2020. Since 2019, the Banque de France has also been the first Eurosystem central bank to publish a full report on its responsible investment policy; we are committed to completely exiting coal by 2024. Our European Central Bank, for its part, has been, under the leadership of Christine Lagarde, the first central bank to include the fight against climate change in its strategic review.

Today supervision, responsible investment, support to green finance, which Bruno Le Maire has just forcefully stressed... and tomorrow the greening of monetary policy itself: this morning, I would like to explore together with you this new frontier that lies before us. It is perhaps the least obvious one, but one of the most important.