Governing Finance and Sustainability

This is the first in a series of roundtables on Governing Finance for Sustainability. Details on the second roundtable can be found here, and the third here.

  • As highlighted by Benoît Coeuré from the ECB in his keynote on “Monetary Policy and Climate Change” last November, there is an accelerating momentum to move sustainability up financial market agendas worldwide. A key aspect of this development is the growing acceptance that the nexus between finance, social cohesion and environmental stability is also a matter for those setting policies and frameworks for the financial system – in particular central banks and financial regulators.

    In parallel, the growing influence of central banks and regulators in response to the financial crisis has triggered debates whether the prevailing consensus on their mandates, governance and instruments remains fit for purpose. Questions around their objectives and targets, their independence and accountability, as well as their capacity to deal with a world that is radically different from the days when the current consensus was forged are illustrations for that.

    Against this background, we believe we are at an inflection point where past convictions on central banking and financial regulation are reviewed and where we have a significant opportunity to make sustainability a cornerstone of a new institutional architecture for the governance of financial markets that may emerge.

    Several central bankers and regulators have already made important steps in this direction. The launch of the NGFS, the «Central Banks and Supervisors Network for Greening the Financial System», is a case in point. References to the distributional effects of monetary policy by e.g. the President of the Minneapolis Fed, the Senior Deputy Governor of the Bank of Canada and the Deputy Governor of the Swedish central bank provide further examples.

    The initiative we launched seeks to build a global community of thought leaders to accelerate this momentum, expand its scope, and secure its institutional embedding.

  • Monday, 21 January, 2019
    14.30Arrival and coffee
    15.15Changing Landscapes
    What are the historical origins of the current consensus on central bank and regulatory mandates, governance and instruments? What are their underlying assumptions and to what extent should these assumptions be reviewed? What are the implications of such a review for central banks and financial regulators?
    17.15New Imperatives
    What are the imperatives that should keep all of us, including central bankers and regulators, awake at night? To what extent are objectives beyond price and financial stability already reflected in central bank and regulatory mandates today? How can and should issues such as inequality, unemployment and climate change be addressed through central banking and financial regulation moving forward?
    Tuesdy, 22 January, 2019
    8.30Arrival and coffee
    9.00Driving Change
    What have been key pathways and underlying narratives for financial policy reforms in the recent past? Who were the leading actors?
    9.45Probing the Toolkit
    How would a broader purpose of central banks and financial regulators be reflected in their activities? How would it shape their existing policy toolkit? What further instruments would be added? How would central banks and regulators respond to a next economic crisis? How would they support the alignment of capital flows with sustainability objectives? And how would they address the opportunities and risks of fintech?
    13.00Defining Purpose, Reviewing Governance, Aligning Instruments
    In view of our discussions in the previous sessions how would we define the purpose of central banks and financial regulators? To what extent is this purpose aligned or misaligned with current mandates or their interpretation as well as current governance and instruments of central banks and financial regulators?
    14.15The Way Forward: Building a Roadmap
    What are pathways to build a narrative on central banking and financial regulation that reflects our conclusions on purpose, governance, and instruments? How would a roadmap toward reform look like? How far can we get on this roadmap until end-2020?