The European Central Bank’s emergency response must ensure that people and the planet, not polluters, are at the heart of a just recovery in Europe and beyond. Instead of handouts for fossil fuels we must invest in an economy that cares for people and the planet.
We ask the European Central Bank to:
DO NO HARM: The Bank must ensure that money meant to support the European economy amidst the Covid-19 crisis does not go to companies who are driving the climate crisis, including the fossil fuel industry, banks who invest heavily in coal, oil and gas, or other high-polluting sectors.
BUILD BACK BETTER: The Bank needs to intervene to help shape a more resilient, sustainable and fair European economy, and provide the leadership and funds needed for a Just Recovery based on a real Green New Deal.
Christine Lagarde: money for people, not polluters
Right now the future of our economy is being shaped by the European Central Bank and its President, Christine Lagarde.
We need to ensure that their emergency response to the Covid-19 crisis supports workers, families, public services and a real Green New Deal. They mustn’t prop up the fossil fuel industry and line the pockets of billionaire CEOs.
Why is this important:
The European Central Bank (ECB for short) sits at the heart of Europe’s financial system. It manages how much money makes the rounds in our economies, sets interest rates and oversees commercial banks across all the countries that use the euro currency. In a time of crisis, like right now, it pumps money into the market and prevents the whole system from collapsing.
The choices the ECB and its President, Christing Lagarde, make right now, as they put in place emergency measures to keep the economy going through the Covid-19 crisis, and prepare recovery plans for when lockdown ends, will shape Europe for years, and impact our everyday lives.
With a clear direction and commitment to a Just Recovery, the urgent measures to salvage jobs and companies in the short-term could also help boost a real green new deal, and our chances for a sustainable and resilient future on a living planet.
Send a letter to Christine Lagarde before the ECB’s Governing Council meets this Thursday, and ask her to ensure that the Bank’s Covid-19 response doesn’t make the climate and inequality crises worse.
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Right now the future of our economy is being shaped by the European Central Bank (ECB) and its President, Christine Lagarde.
Send a letter to Christine Lagarde, and ask her to ensure that the Bank’s €750 billion response to the Covid-19 crisis funds a just recovery: workers, families, public services and a real green new deal. The ECB mustn’t support the fossil fuel industry and line the pockets of billionaire CEOs.
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How the European Central Bank is the key to a just recovery
The European Central Bank (ECB for short) sits at the heart of Europe’s financial system. It manages how much money makes the rounds in our economies, sets interest rates and oversees commercial banks across all the countries that use the euro currency.
In a time of crisis, it is responsible for stopping the whole system from collapsing. The choices the ECB and its President, Christine Lagarde, make right now, as they put in place emergency measures to keep the economy going through the Covid-19 crisis, and prepare recovery plans for when lockdowns end, will shape Europe and impact our everyday lives for years to come.
With a clear direction and commitment to a Just Recovery, the urgent measures needed to protect jobs and companies in the short-term could also help boost a real Green New Deal, and our chances for a sustainable and resilient future on a living planet.
The last time the ECB was in the spotlight like this was after the financial crash of 2008, when the Bank took unprecedented steps to keep the financial sector afloat and prevent mass bankruptcies. This worked in the short-term, but most of the money ended up going to big banks and multinational corporations instead of small businesses and households.
It was a tragic missed opportunity. Instead of making sure that these huge cash injections were used to prevent future crises, eliminate poverty, strengthen our communities and tackle climate change, the money from the ECB mostly ended up in the pockets of the super-rich. Shareholders saw their fortunes skyrocket in the years after the financial crash, while the rest of us paid the price with a decade of harsh austerity. Inequality increased, public services were stretched to the limit, and carbon emissions continued to rise.
The ECB is now taking centre-stage again, as Europe responds to the COVID-19 crisis. Alongside the public health response, governments and public institutions like the ECB are taking extraordinary steps to try to minimise the economic impacts of the crisis on individuals, businesses and society. One of the most important steps they’ve taken is to start injecting more than €750 billion into the European economy over the next few months. The ECB does this mainly by buying bonds from governments and companies.
With this money, states can invest in public services like hospitals or schools even when their citizens can’t work and pay taxes. Banks can give low interest loans which companies can use to cover their losses. And corporations can pay worker’s salaries – or, if no restrictions are imposed, buy back their own shares and create more wealth for a handful of rich shareholders.
And that’s why it’s so important that we learn the lessons from the past, and make sure that this time we don’t try to return to ‘business as usual’ – which, frankly, wasn’t working very well for the majority of people anyway – and instead invest in the kind of future that we actually want.
The ECB’s first priority must be to make sure that their efforts to address the economic crisis do not inadvertently make the climate crisis worse. That means making sure that no money goes to the fossil fuel industry, or other high-polluting sectors, or to banks which finance climate-wrecking industries.
Secondly, the European Central Bank has the opportunity to play a pivotal role in helping Europe to build back better, by providing the funds needed for a real Green New Deal – creating decent jobs, investing in essential public services, and driving a rapid shift to affordable and sustainable energy for all.
If you’re asking yourself now “what is this ECB?” or “why now?” – you’re not the only one. Have a read:
It’s absolutely right that governments and public institutions are prioritising the COVID-19 response, and doing everything they can to protect people’s health and financial security. But the coronavirus crisis has hit when we’re also facing a climate crisis, which hasn’t become any less urgent. So the question we have to ask ourselves isn’t whether we should prioritise one crisis or the other. It’s how we can tackle the two together.
If we look ahead a bit, and think about how we’re going to stabilise and then rebuild our economies, we can see that there are choices to be made. Huge sums of money are already being spent, with more to come – much of it coming from the ECB. Will that money be used to take us back to ‘business as usual ‘ – which included austerity, overstretched public services, extreme inequality, and climate breakdown – or will we instead build economies that are more resilient, more fair, and more sustainable?
A central bank sits at the heart of the financial system. It’s the bank for banks, the lender of last resort, and it oversees the financial sector. The European Central Bank is the central bank of the countries which use the Euro as their main currency (the ‘eurozone’). It’s the single most important financial institution in Europe.
The ECB is responsible for monetary policy, which means that it controls the supply of money and sets interest rates, aiming to limit inflation and keep prices stable. It also oversees the banking system: by lending money to commercial banks and regulating them to ensure that their actions aren’t creating risks for the economy. For more info on all this, the ECB’s own website has good explanations of their different areas of work.
While their main job is to maintain financial and economic stability, they also have a responsibility to support the commitments and priorities of the European Union, which includes tackling climate change. This article from our friends at Positive Money Europe explains more about why the ECB has a mandate and a responsibility to tackle climate change.
The ECB’s highest decision-making body is its Governing Council. This includes the heads of all the national central banks of the Eurozone countries (e.g. the Banque de France, or Germany’s Bundesbank), plus the ECB’s own Executive Board. The Executive Board – who are responsible for the day-to-day management of the bank – includes the President, Christine Lagarde, and five other senior directors.
Central banks are responsible for managing the supply of a particular currency (for the ECB, it’s the Euro). That means that they always have the option to just print more money. Or, more precisely, they can just add some zeros on a computer, which represents more money on a balance sheet. Their job is to keep prices stable, so they’re normally very careful about how much money they create, because creating too much could cause inflation where the currency loses its value. But in moments of crisis, when there just isn’t enough money flowing through the system, they are the ones who can fix that.
Bonds are a way for governments, banks or companies to borrow money. The government or company issues a certain number of bonds, which investors can buy. After a certain amount of time, the investor will get their money back, plus interest. In that sense, it’s similar to getting a loan from a bank – but with bonds, the money can come from a bigger number of investors. Find out more here.
Central banks such as the ECB buy bonds from both governments and companies as a way of injecting more money into the economy, especially during an economic crisis. Right now, they’re buying up lots of bonds so that governments have enough money to respond to the coronavirus crisis and to minimise its health and economic impacts. They’re also buying corporate bonds, so that companies can keep operating and investing. The aim is to minimise the scale of the economic recession.
Quantitative easing is when central banks inject lots of money into the economy, mainly by buying up government and corporate bonds. The ECB calls this its ‘asset purchase programme’. It has also now introduced its ‘Pandemic Emergency Purchase Programme’ (PEPP), which will be used to buy €750 billion of bonds by the end of the year, to rescue the European economy in crisis.
During an economic downturn, people spend less money, banks lend less, and businesses invest less. That can mean that the whole economy grinds to a halt. Quantitative easing is supposed to stop that from happening. However, when central banks introduced these measures after the financial crash in 2008, the money all went into the financial sector, and just drove up the value of stocks and shares – which meant that wealthy people saw their fortunes increase, while very little money actually reached the real economy, the people.
The Green New Deal is a name given to a comprehensive plan to tackle climate change and economic inequality together, by investing in things like decent green jobs, clean energy, and strong public services. The European Commission has created its own plan, called the European Green Deal, which contains some of these elements, but doesn’t have the level of ambition we need to achieve a real systemic change. Exactly what the Green New Deal should include varies depending on who you ask, but some comprehensive examples have been proposed by groups such as a Green New Deal for Europe, or the Sunrise Movement in the US.
It’s International Nurses Day! In the UK we’re celebrating the frontline workers who are keeping us safe in this pandemic, and joining their call to build a fairer, greener and better future for all through a just recovery.
How we choose to rebuild our world after the Covid-19 pandemic will either chart a way out of the twin crises of an economic and climate breakdown, or further fuel inequity, injustice and climate destruction.
Our central banks are at the core of those choices.