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.