Positive Money: Capital markets union is not the alpha and omega of translation. We need monetary support.

In a speech delivered at the Ministry of Finance on the occasion of a meeting organised by the Institut de la Finance Durable, the governor of the Banque de France, François Villeroy de Galhau, highlighted that additional investments of 2–3% of GDP would be needed for financing the green transition.

Mr Villeroy de Galhau said there was a need for a capital markets union in order to gather private resources to finance the transition.

Philippe Ramos, from the research and advocacy group Positive Money Europe, said: ‘The capital markets union focuses only on profitability. A greener future is based on a range of investments – some of which are only profitable in the very long term, such as the renovation of buildings. Other investments may never make a profit, but they are an absolute necessity. The cost of inaction is far higher. If we fail to commit resources now, the financial repercussions of climate change, driven by fossil fuels, will heavily impact GDP, destabilise the banking system and reduce living standards. Are profits more important than the environmental crisis?’

Ruling out funding the transition through money creation, Governor Villeroy de Galhau said it was neither feasible within the law nor good for the economy, as it would cause prices to rise.

‘Governor Villeroy de Galhau shows biases in his approach and consideration of money creation. Some investments can actually reduce inflation, or at least limit it, such as future proofing of properties through home renovation or renewables,’ responded Philippe Ramos.

The Governor of the Bank of France commented that the public deficit is under control and so there should be limited public investments in the green transition.

However, according to Philippe Ramos:- ‘It’s surprising to hear the governor of a central bank commenting on the public deficit. The European Central Bank always says they are politically independent – so why are we now hearing Governor Villeroy de Galhau’s perspective on how the French government spends the people’s money?’

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Notes for editors:

* Positive Money Europe is a research and advocacy nonprofit organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. www.positivemoney.eu

* For further information, please contact Chris Ancil, Press Officer at Positive Money Europe / chris.ancil@positivemoney.eu / X: @christoffler / +32486816541