September 17, 2019 / 10:55 AM / a month ago

Green QE would seriously distort markets - ECB's Villeroy

LONDON, Sept 17 (Reuters) - One of the European Central Bank’s top policymakers poured cold water on calls for a climate change-focused quantitative easing programme on Tuesday, saying such a move would heavily distort the green bond market.

France’s central bank governor Francois Villeroy de Galhau said there had been suggestions for “green quantitative easing” by introducing a bias towards green assets in the ECB’s purchase programme framework.

“Despite its apparent simplicity, this proposal is incomplete and has serious limitations,” Villeroy said in a speech at the World Conference of Banking Institutes.

He stressed that monetary policy targets a macroeconomic objective in the form of inflation and does not single out specific social or sectoral objectives.

“Massive purchases on a relatively shallow pool of green bonds could seriously distort the market,” he added. “I prefer a more ‘integrated’ and holistic approach.” (Reporting by Marc Jones; editing by Huw Jones)

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