Pushing for a green transformation of Switzerland’s economy could challenge the effectiveness of the central bank’s monetary policy, according to Governing Board Member Andrea Maechler.

She added during an interview for the University of St. Gallen that although the Swiss National Bank (SNB) takes climate change extremely seriously, and is purchasing green bonds as part of its reserve management, officials are required to stay within the limits of their mandate.

“It could really bring conflict of interest. When we use monetary policy tools for that purpose, they may be helpful to move in that direction, but they’re detrimental to the effectiveness of monetary policy,” Maechler said.

Climate activists have pressed Switzerland’s central bank to use its more than 900 billion francs of foreign exchange reserves to help tackle the problem of global warming.

Yet although the Swiss National Bank has stopped investing in firms whose main business is coal mining, it is adopting a more prudent stance than its euro-area counterpart, Bloomberg reports. The European Central Bank has pledged to incorporate climate change factors into its monetary policy framework. 

Maechler went on to say that there were several things the Swiss national bank could do. These include utilising its expertise with data and modelling to help officials better understand the risks to the economy as well as the stability of the financial system. 

“We do not have the right tools to promote a green economy. The right tools would be taxation, regulation -- that is not something we have. Each of us has to play its own role,” she stated.