Central bank collateral as a green monetary policy instrument

McConnell, Andrew; Yanovski, Boyan; Lessmann, Kai

doi:10.1080/14693062.2021.2012112

Cited by 25 publications

(7 citation statements)

References 35 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Notably, a high CBT prepares investors for future moves on the part of a central bank. However, central banks tend to aim for a reduction in emissions as well as promote a carbon-neutral economy [113]. This is the probable reason that CBT can indirectly cause a decrease in emissions.…”

Section: Core Model Resultsmentioning

confidence: 99%

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

et al. 2022

View full text Add to dashboard Cite

Environmental control remains a salient aspect of states’ policies in the present decade. To reduce emissions, governments and central banks tend to adopt various strategies. The present research quantifies the nexus between fiscal and monetary policy, institutions’ quality, central bank characteristics, and carbon dioxide and greenhouse gas emissions. Data has been sourced from 95 countries during the period from 1998 to 2019. According to the empirical results, the main determinants of gas emissions in developing countries are economic growth, government expenses, and central bank independence, whereas, in developed countries, they are economic growth, government efficiency, and central bank transparency and independence. Economic growth is a significant deteriorating factor in the state of the environment. By contrast, institutional and bureaucratic quality, measured through government effectiveness and expansionary fiscal policies as well as central bank independence and transparency, are ameliorating factors, as they decrease emissions. To conclude, governments must first reduce control over central banks and target government spending on the energy transition.

show abstract

Section: Core Model Resultsmentioning

confidence: 99%

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

et al. 2022

View full text Add to dashboard Cite

show abstract

“…19 Indeed, one should be mindful of potential "positive synergies" between green monetary policy on one side, and carbon pricing (McConnell et al, 2021) and fiscal policy (Svartzman et al, 2021) on the other.…”

Section: Discussionmentioning

confidence: 99%

“…First, there has been little conceptual and theoretical work on green monetary policy instruments and, second, the academic literature tends to focus on only a small subset of potential green monetary policy instruments, as opposed to engaging in a more comprehensive and theory-based assessment. Last but not least, in much of the academic literature there is a tendency to discuss central bank engagement with a proactive agenda in a manner that takes at face value the principle of market neutrality, dismissing a range of otherwise promising policy options on that account (see McConnell et al, 2021). The point of departure of this paper is the opposite premise; that market neutrality concerns should not be a constraint when devising a green monetary policy strategy.…”

Section: Introductionmentioning

confidence: 95%

“…There are three main approaches suggested in the literature, all of which differentiate haircuts in accordance with the carbon footprint of assets (NGFS, 2021a;McConnell et al, 2021;Schoenmaker, 2021). But before we examine them, a brief primer on collateral haircuts is warranted.…”

Section: Using Haircut Spreads To Reshape Collateral Hierarchiesmentioning

confidence: 99%

“…Defensive-oriented thinking is not actually green given that the objective is financial stability not climate change mitigation. But asMcConnell et al (2021: 2) note, "the goal of long-term financial stability exhibits a significant overlap with the goal of decarbonizing the economy". 4 A prominent example of how these dynamics play out, was the decision by Joe Biden's nominee for the Federal Reserve Board, Sarah Bloom Raskin, to withdraw in response to sturdy resistance to her candidacy from Republicans on the Senate Banking Committee.…”

mentioning

confidence: 99%

See 2 more Smart Citations

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

Vestergaard¹

2022

View full text Add to dashboard Cite

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.

show abstract

Do environmental and climate scores for financial institutions reflect lending and underwriting activity? A case study of global banks

Cregan,

Kelly,

Clinch

2024

Bus Strat Env

View full text Add to dashboard Cite

Achieving international climate targets may require more than $8 trillion in annual investments to 2030. We investigate the extent to which third‐party environmental scores for banks reflect lending and underwriting in fossil‐fuel and low‐carbon industries, and how ratings are influenced by outward signals of commitment to climate action. We provide empirical evidence on the performance of leading Environmental, Social and Governance (ESG) ratings providers and offer actionable guidance as to how ESG ratings may be improved in this context. We find that banks' environmental scores are most strongly influenced by signals of future intention regarding climate action, rather than by prior and current lending and underwriting behaviour. Our analysis highlights the need for rating providers, when constructing environmental scores for banks, to place more weight on key capital allocation decisions, and less on future intentions. We recommend that banks disclose breakdowns of their financing activities in key carbon‐intensive and low‐carbon industries.

show abstract

Central bank collateral as a green monetary policy instrument

Cited by 25 publications

References 35 publications

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

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

Do environmental and climate scores for financial institutions reflect lending and underwriting activity? A case study of global banks

Contact Info

Product

Resources

About