Financial market regulation in general and banking supervision in particular need to be focused on their core tasks and remain geared to risk. Watering down the regulatory mandate would create conflicts of interest and ultimately lead to risks to financial stability – and surely that cannot be what we want. The European Commission today unveils its action plan on sustainable finance.
It is important for us that promoting the greening process does not take place through the back door via financial market regulation and banking supervision. This is something we will watch out for when the action plan is implemented. Instead, policymakers can use other, traditional instruments such as tax incentives to foster the development of green economic sectors.