Monetary Policy for the Climate? A Money View Perspective on Green Central Banking

Jakob Vestergaard ()
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Jakob Vestergaard: Roskilde University, Denmark.

No inetwp188, Working Papers Series from Institute for New Economic Thinking

Abstract: Central banks can potentially influence the investment decisions of private financial institutions, which in turn will create incentives towards green technology adoption and development of lower emission business models. This paper examines how monetary policies can be deployed to promote a greening of finance. To guide the efforts, the paper mobilizes the Money View literature. This enables a comparative assessment of different monetary policy options. The main finding is that a promising way forward for green monetary policy is to adopt a strategy of expanding collateral eligibility through positive screening and widening haircut spreads to change relative incentives in favor of green over brown assets.

Keywords: Climate change; green central banking; monetary policy; collateral policy; haircuts. (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 G18 G28 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2022-07-02
New Economics Papers: this item is included in nep-cba, nep-ene, nep-env, nep-hme and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:inetwp188

DOI: 10.36687/inetwp188

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