In Germany, deposits up to 100,000 euros are secured by law. Higher amounts are secured through the Association of German Banks (BdB). For individuals, the secured amounts will be limited to 5 mln from 1 January 2022 and they will reach 1 mln by 2030. For companies, the amount will be slowly lowered from 50 mln to 10 mln by 2030.

Supply has not been able to keep up due to years of lower investments in fossil fuels. Europe’s renewable energy sources have struggled with low wind speeds. German power for next year reached €192 MWh. As utilities burn more fossil fuels, carbon prices surged to a record €90.75/t, with options traders betting prices will hit €100/t by the end of 2021.

Bond investors are reacting to higher inflation: across 35 economies, 5-year bond yields have risen by an average of 0.65 percentage points in the past 3 months. In OECD countries, inflation rose to an uncomfortable 4.6% year on year in September. Real bond yields, after accounting for inflation, are -1%, within spitting distance of record lows.

IOSCO, which groups watchdogs from the United States, Europe, Asia and elsewhere has published recommendations which its members are obliged to apply when scrutinising how asset managers sell funds which tout ESG good practice, with the value of such funds hitting a record $3.9 trillion at the end of the third quarter, Morningstar data shows.

A modest rise in yields that inflicts trillions of dollars in losses. The potential for steep losses is a legacy of the tilt toward longer-term borrowing during the era of historically low rates. The higher duration is, the larger the drop in prices. With a half-point increase in yields, the hit to the $68 T Bloomberg Global Aggregate Index would be around $2.6 T.

Green bonds trade less often than corporate bonds in general and tend to yield about 0.04 percentage point less. If many investors decide to liquidate their holdings, they may be disappointed by demand in the secondary market. Bank of England will likely cut its target for corporate bond purchases in the energy sector as it implements measures to greenify QE.

Energy analysts argue that the European Union moved too quickly away from fossil-fueled power, before ensuring that sufficient renewable sources could take up the slack in an emergency. Caught halfway in a transition that should take decades, they say, Europe is now scrambling to find coal and gas to burn in its remaining traditional power stations.

Spain has called for a change to the EU’s marginal pricing system and for a common EU approach, including natural gas purchases and strategic reserves. It has pushed back against electricity companies’ challenge to Madrid’s €3bn levy on their “windfall profits”. Some EU leaders are calling for the bloc to reconsider decarbonisation plans.

“The short-term prices are the only price signals for long-term investment and this has to change,” said the CEO of nuclear power giant Electricite de France SA. He also urged EU nations to overcome their divisions concerning nuclear power when setting the financial rules, otherwise, only non-European banks will be able to finance new atomic plants.

The EU wants to become the first climate-neutral continent by 2050. That will not work without massive government investments and subsidies. The EU's “Green Deal” is the conceptual basis for this change. Indirectly, the state's policy will also trigger price inflation in “green” stocks. Green price bubbles could emerge at some point in the 2020s.

Banks have earned about $3.6 billion in fees in 2021 from arranging sales of ESG bonds for companies and governments. That is more than double the $1.6 billion banks pocketed so far this year from issuing debt for fossil-fuel companies. About $750 billion of ESG bonds have been issued this year, compared with $468 billion during all of 2020.

Institutional investors rushed to buy the UK’s first green sovereign bond with a 0.87% yield. The government will launch Green Savings Bonds through the national savings scheme. If it offered the “market-leading rate” for retail savings of 1.8%, the scheme would cost taxpayers £210m per year. Setting the rates lower could look unattractive to customers.