Shutdown: How Covid Shook the World's Economy

by Adam Tooze

And the ECB innovated with more than just policy instruments. Like the European Commission, the ECB had joined the green bandwagon. In her confirmation hearings with the European parliament in 2019, Lagarde had emphasized her determination to open the question of the ECB’s responsibility with regard to climate change.49 As the commission began sketching the spending plans for NextGen EU, Lagarde initiated a round of discussions with civil society groups calling for central bank bond buying to be slanted in a green direction.50 It wasn’t just a matter of supporting general government fiscal policy or approving new taxonomies of “green bonds.” Key figures in the ECB’s leadership indicated that they saw no reason why the bank should maintain “neutrality” in its purchase, for instance, of the bonds of European oil companies, when it was clear that the financial market was not yet fully pricing in the risk of climate catastrophe.51 The matter was far from settled, but the fact that the idea could even be aired suggested how far the ECB had moved. Central bankers were kicking over the traces.