LAPSE:2023.34099
Published Article
LAPSE:2023.34099
The Costs and Trade-Offs of Green Central Banking: A Framework for Analysis
April 24, 2023
The participation of central banks in the fight against climate change has recently been advanced in several academic articles and policy papers. Since the emerging consensus is that climate change poses financial risks, the envisaged green central banking has a responsibility to address environmental sustainability as a means of promoting financial stability—an increasingly accepted goal of central banks in the post-financial crisis world. Thus far, the pro side of the argument is well represented in the literature, though often the benefits remain implicit: with the help of central banks via monetary and macroprudential policies, a smooth transition to a low-carbon economy would be somehow beneficial to all of us. With this article, we aim to add to this literature by looking at the costs and trade-offs of this course of action in light of the observation that the con side of the proposal has been only marginally addressed. We put forward a framework for the analysis of the costs and trade-offs of green central banking and exemplify the applicability of this framework by studying three cases of central banks for which the transition to green operation has been advanced. We find evidence that if costs and trade-offs are taken into account, the case in favor of greening central banks becomes less straightforward than is currently conveyed in the literature.
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Keywords
carbon dependability, central banking, green central banking, green finance
Subject
Suggested Citation
Șimandan R, Păun C. The Costs and Trade-Offs of Green Central Banking: A Framework for Analysis. (2023). LAPSE:2023.34099
Author Affiliations
Journal Name
Energies
Volume
14
Issue
16
First Page
5168
Year
2021
Publication Date
2021-08-21
Published Version
ISSN
1996-1073
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Original Submission
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PII: en14165168, Publication Type: Journal Article
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LAPSE:2023.34099
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doi:10.3390/en14165168
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[v1] (Original Submission)
Apr 24, 2023
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Apr 24, 2023
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