The greening of central banks

Clara I. Gonzalez and Soledad Núñez Ramos

Chapter 21 in Handbook of Climate Change and Financial Markets, 2026, pp 436-455 from Edward Elgar Publishing

Abstract: Climate change and the transition to a carbon-neutral economy pose macroeconomic, microprudential and macroprudential risks, thereby affecting areas under the remit of central banks (and supervisors) such as banking supervision, financial stability and monetary policy. In recent years, there has been an intense debate between academics, analysts and central bankers about the role central banks should play in addressing environmental risks and supporting green finance. Currently, there is a general consensus that central banks play a role in addressing climate change and transition risks. However, there is still debate on the extent to which central banks should incorporate environmental considerations in their operational framework or actively support green finance. Against this background, a significant and increasing number of central banks (and financial supervisors) have started to incorporate environmental risks into their operational framework, albeit with different intensities and scopes, depending on their mandates and their governing bodies’ assessment of the role played by central banks. This chapter examines the implications for central banks of climate change and the associated mitigation measures. It also reviews the actions actually taken by central banks and the challenges they face.

Keywords: Climate change; Central bank; Sustainable finance; Financial system (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035340415
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