Europe needs swagger

Carney right to raise climate fears: ECB governor

Polar bear on a wide surface of ice in the russian arctic close to Franz Josef Land.
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Bank of England Governor Mark Carney was right to raise the subject of climate change, a member of the European Central Bank's (ECB) governing council has told CNBC.

At a speech late last month in the City of London, Carney warned that the "challenges currently posed by climate change pale in significance compared with what might come."

"Once climate change becomes a defining issue for financial stability, it may already be too late," he said, adding that "while there is still time to act, the window of opportunity is finite and shrinking."

The BoE governor has since come under criticism from commentators for speaking outside the remit of a central banker. However, Erkki Liikanen, a ECB governing council member and governor of the Bank of Finland, has backed the comments made by the Canadian.

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Liikanen told CNBC at the IMF/World Bank annual meeting in Lima over the weekend that while monetary policy doesn't have a direct impact on climate change, "we must be able to analyse properly the issues which have impact on the environment we work."

"It's very clear that climate change is one of the biggest issues of today," he said.

Liikanen's remarks come as the world's political and economic leaders prepare for the COP21 summit in Paris to agree on a way to halt the steady increase in world temperatures.

"We must be humble when new challenges come," the Finnish banker added.

"For instance the question about climate change. One key item of that is climate finance: how to finance those reforms, those technologies that make it easier for the countries to adjust so that the waste impact will be smaller. Of course that is the territory in which we operate."

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