European Central Bank executive board warns: Natural degradation may trigger inflation risks.

European Central Bank Executive Board member Frank Elderson stated that the ECB must consider the risks posed by natural degradation, a process that could potentially lead to inflation similar to climate change. In a speech on Tuesday, Frank Elderson said, "If natural degradation continues, economic activities relying on ecosystem services will be affected by issues such as supply chain disruptions, which will impact prices and ultimately lead to inflation." Frank Elderson mentioned that both natural degradation and climate change are related to the ECB's mandate to ensure price stability in the euro area. As the Vice Chair of the ECB's Supervisory Board, Frank Elderson has repeatedly warned that environmental challenges will exacerbate economic fluctuations. At the time of Frank Elderson's statements, the European Central Bank is undergoing a new round of assessment of its monetary policy strategy, with the results expected to be announced in the second half of 2025. He stated, "The ECB is about to conduct an evaluation of its monetary policy strategy, providing an opportunity to confirm the relevance of natural degradation and climate change to the euro area's monetary policy." The ECB's previous assessment of its monetary policy strategy concluded in 2021, proposing a climate action plan covering macroeconomic modeling, financial stability monitoring, data collection, risk assessment capabilities, and the ECB's monetary policy operations.