The Finrestra podcast - S01 / A12

What can the ECB do when inflation is driven by energy costs? Three proposals.

What can the ECB do when inflation is driven by energy costs? Three proposals.

Quick recap of the financial news of January 2022.

Euro area inflation was 5.1% in January.

The ECB says that this inflation is beyond its control, because it's driven by international energy markets and bottlenecks in supply chains.

In this episode, I do three proposals for the European Central Bank to get a grip on energy-driven inflation.

1) Buy shares of oil and gas companies. As a major shareholder, the ECB could force them to lower prices. See also this tweet from 2020: https://twitter.com/JanMusschoot/status/1322177512554856454

2) Fund a European Green Infrastructure Company. This will increase the supply of cheap, renewable energy. Details here: https://blog.janmusschoot.be/2017/11/15/green-infrastructure-bonds-with-macro-strings-attached-how-the-ecb-could-fulfill-its-mandate-by-fighting-climate-change/

3) Lower the interest rate for energy-efficiency investments. Meanwhile, the ECB can hike rates on other loans. This will stimulate a shift of resources in the real economy towards renewable energy and efficiency. In the long run, this will speed up the transition to a net-zero emission economy and reduce the effect of fossil fuel prices on inflation.

Thanks for listening!

If you have questions or suggestions, you can mail me at jan.musschoot@finrestra.com

Over The Finrestra podcast

Jan talks about finance, with a focus on Europe.

Expect analyses of banks, sustainability, the ECB, and interviews with interesting people who shape the industry.

The first episode of the month starts with a short recap of the news.

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