An executive board member of the ECB tells a Global Solutions Summit panel that current models are “quite deficient” in measuring transition risk
Berlin, May, 27th 2021 – A new conception of economic modelling is needed in the fight against climate change, which has increasingly become a focus for central banks, according to a panel at the Global Solutions Summit.
Isabel Schnabel, executive board member of the European Central Bank (ECB), said that while central bankers were traditionally reluctant to deal with climate change, more interaction with the general public has massively spurred the ECB’s focus on the issue over the past few years.
“We have to ask ourselves whether we are doing what we could and should do with respect to climate change, so this is not just about asset purchases, or not just about lending operations – we have to look at everything and this actually starts with fundamental thinking about economic models,” Schnabel said, adding that the current models are “quite deficient” in measuring transition risk.
A new conception of economic modelling “would be absolutely precious in my view because we know more and more now what does it mean to be net zero by 2050, which was not there even five or ten years ago,” said Laurence Tubiana, chief executive of the European Climate Foundation and a key architect of the Paris Climate Agreement.
Schnabel said the main constraint central banks are facing is that they “cannot do anything which violates our primary mandate of price stability.”
By Sophie Wingate, on behalf of the Global Solutions Initiative
Notes to the Editors
The Global Solutions Summit 2021 will take a hybrid virtual and in-person format due to the Corona pandemic this year. In the studio, which will be set up in-house at the Berlin European School of Management Technology (ESMT), participants from all over the world will be connected with moderators and speakers who will attend in person from the studio. A digital platform will allow all participants not only to follow the presentations and discussions, but also to exchange ideas with other attendees. “The appeal of the physical Summit has always been the ability to meet face-to-face with many like-minded people. It is exceedingly important to us that much of this can also take place in the digital space,” stresses Dennis J. Snower.
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