Green Central Banking: Options for the ECB on Climate Change

Author: Eóin Flaherty, Emerging Voices

There is growing discussion about the need for central banks to tackle climate change. This paper by Eóin Flaherty, a member of the IIEA’s Emerging Voices Group, outlines several possible options for the ECB to do so. These options include: mitigating climate-related risks as economic and financial risks; green regulatory guidance; green risk weighted assets; green quantitative easing; reducing the direct climate burden of the ECB; and greening the ECB’s reserve assets.

Apart from greening the ECB’s reserve assets, steps have been taken on all these options. However, the idea of green quantitative easing is likely to be contested. The ECB can be a major catalyst for climate action both through its monetary policy and regulatory decisions and by leading by example on green corporate social responsibility.

The paper is available to download here.

This paper is part of the Future of the EU27 Project, which is sponsored by the Department of Foreign Affairs and Trade.