Federal Reserve Chair Jerome Powell’s narrow approach on climate change was challenged by European counterparts who contradicted his insistence it was not a primary factor in making monetary policy.

“Anything that can affect the outlook for the economy can, in principle, affect monetary policy. So climate change would certainly qualify for that,” Powell said Friday during a virtual conference on the role of finance in combating climate change. “I would say, though, that today, climate change is not something that we directly consider in setting monetary policy.”

While the Fed is looking at the impact of climate change through the lens of its duty for financial stability, European Central Bank President Christine Lagarde has taken a much broader view.

“We would be failing on our mandate if we did not account for climate change when it comes to understanding and measuring inflation,” Lagarde said. “We would be failing on our mandate if we do not measure the impact that climate change has on the assets that we hold, on the assets that we buy, and on the collaterals that we have in stock.”

ECB officials are close to completing a wide-ranging strategic review, in which Lagarde has made climate change a core topic and pushed her colleagues to be more engaged in the issue.

Governing Council members have already signaled agreement that climate risks need to be made more transparent and better integrated in economic models, but there’s still some debate over how far monetary policy can go in supporting the transition to a greener economy.

Lagarde’s enthusiasm was echoed by French governor Francois Villeroy de Galhau, who spoke on the same panel, and said he hoped the ECB would become the first central bank to take decisive steps against climate change in its monetary policy.

“We can be pioneers in this field,” Villeroy said. “It is in full compliance with our mandate. It is not just legitimacy to act, it is a duty to act.”

Central banks and other financial regulators in recent years have come under increasing pressure to apply their regulatory powers to help contain greenhouse gas emissions.

In the U.S., the Biden administration in May urged regulators to report on their plans for assessing the threat climate change posed to financial stability.

For China, President Xi Jinping’s pledge to make his country carbon neutral by 2060 means the world’s top-polluting nation will need a drastic shift from fossil fuel to clean energy. Facilitating that transition is a key task for the People’s Bank of China, according to Governor Yi Gang.

”For the central bank, our task is managing the transition in a smooth manner,” said Yi, who was also speaking at the conference.

With assistance from Yujing Liu.

This article was provided by Bloomberg News.