On Monday 17 March SFL organized a public presentation of our report “A Green Interest Rate for Europe”. It was hosted by Brenda Kramer (SFL Director), presented by Stan Jourdan (co-author of the paper), and discussed by Francesco Papadia (Bruegel) and Carsten Brzeski (ING Germany). The event was attended by 114 participants, making it one of the most successful webinars organized by SFL. Watch the webinar back below.

Stan introduced the discussion by explaining how the ECB to use the EU Taxonomy to give commercial banks lower interest rates when they lent to sustainable projects. He outlined the policy context of the proposal, as well as the main design choices from the report.

The discussion was continued by Francesco Papadia (formerly at ECB, presently at Bruegel), who commended the paper but outlined some of the main challenges to green interest rates. He indicated operational difficulties in using the EU Taxonomy, lack of mandate for the ECB to introduce the green rate, and lack of urgency for the program given the presently loose monetary policy stance.

Carsten Brzeski (ING Germany) the opportunity the focus the green interest rate program specifically for mortgages and green lending in the real estate sector. He also suggested that ECB could be bold and experiment with the green rate, and flexibly phase it out if necessary for its monetary policy purposes, like it did with the TLTRO programme.

The event was closed with the questions from the audience. We discussed there the ECB’s purchase of green bonds, ensuring passthrough of the low interest rates to borrowers, and the magnitude of losses the green rate policy could incur on the ECB’s balance sheet.

You can find the slides of Stan Jourdan here.

You can find the slides of Francesco Papadia here.