He stresses that monetary policy "is designed to fulfill its mandate", even if it means a reduction in financial results
MADRID, 28 Oct. (EUROPA PRESS) -
The head of Risks of the European Central Bank (ECB), Fernando Monar, has projected that the central banks of the Eurosystem will face temporary net losses due to interest rate rises.
Monar explained that the central institutions of the Eurosystem are currently facing the challenges linked to the war in Ukraine and high inflation, which has generated a scenario of "uncertainty" and different responses, although "flexible and decisive".
The Governing Council of the ECB decided on Thursday to raise interest rates again by 75 basis points, to place refinancing operations at 2%, while the deposit rate will reach 1.5% and the loan facility , 2.5%. The new monetary policy decision implies the highest level since January 2009.
Monar has argued that these decisions happen in part to reduce support for demand and prevent the risk of a persistent upward change in the inflation outlook, as he argued during his speech at a conference organized in the Congress of Deputies by the Association for the Excellence of Public Services (AESP) and Iberdrola.
In this new context, Monar explained, the financial risks assumed by the monetary institutions can materialize in higher interest expenses for the central banks of the euro zone, which do not necessarily have to correspond to an equivalent increase in income on assets. .
However, the ECB's Head of Risks has remarked that the authority's monetary policy "is designed to fulfill its mandate, although this may lead to a reduction in financial results."
"The central banks of the Eurosystem are facing a reduction in our net income and even net losses before net income recovers again in the future," Monar said in a scenario of rate hikes.
Ultimately, Monar has defended the fundamental role that central banks play in terms of the resilience of the financial stability system.
On the other hand, Monar has also reviewed some of the challenges that the institution is currently facing. Among them, he referred to climate change considerations in the implementation of monetary policy.
In this regard, the ECB's Head of Risks has confirmed that information requirements on environmental sustainability measures will be introduced as a new eligibility criterion. In addition, the body will also take into account climatic risks when reviewing collateral risk control frameworks and climatic stress tests will be carried out.
