The European Central Bank should review its strategy on a regular basis in future and adopt more sustainable investment practices, ECB policymaker Olli Rehn said on Monday.
The ECB is currently carrying out a broad review of its strategy, the first such review since 2003.
“I would consider it a good idea that going forward we would review the ECB’s monetary policy strategy regularly, for instance every five years,” Rehn said in a Bank of Finland webinar on the ECB’s ongoing strategic review.
The ongoing review should take into account growing global challenges such as climate change and the need for sustainable economic development, Rehn said.
The Finnish central bank governor said his own bank had last year committed to the United Nations' Principles for Responsible Investment, which require recognizing environmental, social and corporate governance issues in investment practices.
“We have detached ourselves from certain black or brown companies... It is logical that I support the same for the ECB’s monetary policy asset purchase programs,” Rehn said, referring to a color-coding system for assessing how “green” or by contrast how polluting companies are.
Rehn also called for the ECB to “look across the pond” to the United States to learn from the Federal Reserve Board’s findings in a strategic review that it concluded earlier this year.
The ECB should consider a similar strategy to that of the Fed which adopted a flexible inflation target, allowing inflation to overshoot above its 2-per-cent limit for a while, Rehn said.
“Precisely because they want to support employment and economic growth in this way,” Rehn said.
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