BOJ’s Kuroda: “Central Banks Should Avoid ‘1-size-fits-all’ Climate Standards”

#climate #BOJ

Bank of Japan Governor Haruhiko Kuroda said Friday central banks must allow for differences when setting standards for climate risk, as the necessary responses to climate change could vary from region to region.

Mr. Kuroda also said any policy action on climate change by central banks must be “carefully assessed” against their monetary policy mandates, such as achieving price stability.

Central banks’ policy responses on climate change should avoid a 1-size-fits-all nature,” Mr. Kuroda said at the Green Swan conference of the Bank for International Settlement.

Unlike some other central banks that manage foreign reserves, the BOJ has bought government bonds and risky assets such as ETFs solely for monetary policy purposes, he said.

This is one of the instruments of our monetary policy,” Mr. Kuroda said of the BOJ’s ETF buying. “As such, I still think we have to respect our central bank mandate, which is basically to achieve price stability and financial sector stability.”

Asked whether central banks should use asset buying as a tool to promote green bonds or other environment-friendly investments, Mr. Kuroda said the BOJ’s monetary policy response must avoid distorting resource allocation.

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