The Governor of the Central Bank of Malta, Professor Edward Scicluna, together with the Minister for Finance and Employment, the Honorable Clyde Caruana, attended the Joint Informal Economic and Financial Affairs Council (ECOFIN) Meeting, which took place in Slovenia on 10 and 11 September 2021. In this meeting, organised by the Slovenian Presidency of the Council of the EU, the Ministers for Economic and Financial Affairs were joined by the Governors of National Central Banks (NCBs) and other participants to exchange views on current affairs related to their area of expertise.

The ECOFIN is responsible for EU policy in three main areas, namely economic policy, taxation issues and the regulation of financial services. It is made up of economic and finance ministers from all EU member states who generally meet once a month.

The main issues addressed in this two-day informal meeting included: the effect of climate change on the stability of financial systems and what type of fiscal policy should be pursued in the coming years; the issue of adapting corporate tax reform to the digital age; and the options for channelling IMF special drawing rights to vulnerable countries.

During the Friday afternoon session, Governor Scicluna spoke briefly about the role of the ECB in the fight against climate change and its negative effects. In his intervention, he argued that judging by the protests outside the front door of the ECB, there are no doubts in people's minds that the institution can no longer ignore the climate change agenda. Nevertheless, sceptics may argue that neither the Treaties nor the ECB's mandate grant the Bank with any explicit role or competences on this area.

On this issue, Governor Scicluna pointed out that a parallel could be drawn between the intervention on climate change and the response to the COVID-19 pandemic. Thus, "like climate, the Treaties and the mandate make no reference to the pandemic. Yet every NCB's economic outlook and monetary policy meeting would not make sense were it to leave out the progress of the pandemic". Moreover, he reminded that many new instruments were introduced to address the economic effects of the pandemic and risks posed to the financial stability.

Therefore, Governor Scicluna concluded that: "The ECB should not be expected to drop its primary objective of price stability when addressing issues such as climate change and COVID. But at the same time, one believes that its Governing Council should  find ways and instruments to complement the existing fiscal tools in order to be able to correct what can be considered as the mother of market failures. Indeed, the negative externalities of climate change have been significantly underpriced for many years."