Greening Monetary Policy: CBDCs and Community Development Banks

Susan K. Schroeder

Journal of Economic Issues, 2023, vol. 57, issue 2, 654-660

Abstract: In the face of an ecological transition, central banks are finding conventional tools to manage the economic conditions are no longer adequate. Conventional tools manage short-term changes in demand, whereas climate change is a long-term phenomenon which will impact supply conditions. This article discusses the re-introduction of developmental monetary policies to provide liquidity to industries critical for social provisioning during an ecological transition. A potential new tool is central bank digital currencies (CBDCs). CBDCs could be lent and/or used to partially capitalize a system of community development banks. The article discusses the logistics and limitations of CBDCs as a developmental tool.

Date: 2023
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DOI: 10.1080/00213624.2023.2202571

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