The European Union has expanded the mandate of the European Central Bank (ECB) to increase oversight of climate risks and digital assets facing banks.
This move aims to equip the regulators to address emerging challenges in the financial sector.
Under the new rules, the ECB will now monitor banks’ long-term strategies to transition toward net-zero emissions over the next 30 years. This change positions the ECB to lead on climate-related financial regulation across Europe. Climate change poses potentially significant financial stability risks, and banks will need to adapt.
Furthermore, the ECB’s jurisdiction now also includes supervising crypto asset services owned by banks. This reflects the growing prominence of digital currencies like Bitcoin in finance and the need to manage risks like money laundering.
Operational leasing businesses owned by banks will also fall under ECB oversight going forward. While less traditionally regulated, issues at companies like Societe Generale’s LeasePlan underscore the complex risks posed.
The expanded mandate is revealed to bring European regulators closer together on climate policy after previous disagreements over how aggressively to enforce climate measures.
Also Read: Robinhood Expands Crypto Services in the European Union
