By Petra Köhler-Ulbrich, Yuma Schuster and Nikoleta Tushteva Banks consider the climate performance of firms and buildings in their lending policies. The euro area bank lending survey shows that lower climate risks tend to improve credit conditions. Meanwhile, green investments increase loan demand from firms and households. Reducing a firm’s carbon emissions or improving the energy efficiency of a building can help businesses and households to get a loan from the bank at more favourable conditions, the euro area bank lending survey (BLS)...

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The Council and the European Parliament negotiators reached a provisional agreement on measures to incentivise defence-related investments in the current EU budget to implement the so-called ReArm Europe plan, an EU initiative to increase defence spending and strengthen the EU’s military capabilities. The agreement includes a landmark decision to associate Ukraine to the European Defence Fund, underscoring the EU’s enduring commitment to Ukraine’s security, resilience, and gradual integration into the European defence industrial base. “The agreement reached today on incentivising defence-related investments in...

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By Anamaria Piloiu, Oleg Reichmann and Florian Resch Climate risks affect credit ratings. And these, in turn, influence how banks can use securities as collateral to borrow money. This post takes a closer look at how the Eurosystem integrates climate change risks into its own collateral framework, through the credit risk channel. Central banks must prepare for the financial risks that come with rising temperatures and fast-evolving green policies. In the Eurosystem, we are actively working to ensure that the euro...

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