Andrew Milligan, SPE Council member, held a discussion with David Owen, from Saltmarsh Economics, on the breadth of policy issues facing central banks. In addition to inflation targeting, and the health of the economy in general and the financial services sector in particular, the conversation focused on a new objective which governments have recently given many central banks, namely supporting the transition to a green economy and combatting climate change.

During the interview, David initially explained some of the problems facing central banks as they coped with the global financial crisis, then the Covid shock, and recently another banking emergency. Against this background he considered the different ways in which the ECB, the Bank of England and the Federal Reserve are outlining the parameters which they will use to assess climate risks amongst the largest banks. From its very beginning, the ECB has viewed climate change as front and centre of its mandate, in contrast to different approaches seen in the UK and USA. David also explained recent developments in this area such as the role of the Network of Central Banks and Supervisors for Greening the Financial System. He concluded that just as ESG has been a major investment theme for equity investors, so it will become for bond investors too.

David Owen has worked for many years in the City, for Dresdner Kleinwort Benson and then for Jefferies as their chief European economist. More recently he has set up the Saltmarsh Economics consultancy with Marchel Alexandrovich. Their research analyses policy making at the Bank of England the ECB, with a particular focus on the economic and policy implications of climate change and the race to net zero, along with developing proprietary indicators to help investors decarbonise their portfolios.

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