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The role of central banks in combating climate change and developing sustainable finance

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  • Clara Isabel González Martínez

Abstract

The consequences of climate change affect both the financial system and the economy as a whole. Understanding the attendant risks and meeting the goals of the Paris Agreement, so as to restrict the rise in global temperature and mobilise the resources needed to achieve a carbonneutral economy, is a global challenge for the political and economic authorities. International cooperation is also a must. Central banks are not impervious to these movements and are including on their agendas climate and sustainability-related aspects in various areas, both in the management of own portfolios and in supervision and financial stability. And it is also being discussed how to include these aspects in monetary policy frameworks. While the central role in this arena is, given their nature, for governments, central banks may have an important role as catalysts, leading by example to contribute to achieving the goals of the Paris Agreement. In Europe, the European Central Bank (ECB) and the National Central Banks (NCBs), including the Banco de España, are working to incorporate these matters into their own business areas.

Suggested Citation

  • Clara Isabel González Martínez, 2021. "The role of central banks in combating climate change and developing sustainable finance," Economic Bulletin, Banco de España, issue 3/2021.
    • Handle: RePEc:bde:journl:y:2021:i:03:d:aa:n:31
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    References listed on IDEAS

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    1. Editorial, 2020. "Covid-19 and Climate Change," Journal, Review of Agrarian Studies, vol. 10(1), pages 5-6, January-J.
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    3. Margarita Delgado, 2019. "Energy transition and financial stability. Implications for the Spanish deposit-taking institutions," Revista de Estabilidad Financiera, Banco de España, issue Autumn.
    4. Pablo Aguilar & Beatriz González & Samuel Hurtado, 2021. "The design of macroeconomic scenarios for climate change stress tests," Revista de Estabilidad Financiera, Banco de España, issue Spring.
    5. Enrico Bernardini & Ivan Faiella & Luciano Lavecchia & Alessandro Mistretta & Filippo Natoli, 2021. "Central banks, climate risks and sustainable finance," Questioni di Economia e Finanza (Occasional Papers) 608, Bank of Italy, Economic Research and International Relations Area.
    6. Andrés Alonso & José Manuel Marqués, 2019. "Financial innovation for a sustainable economy," Occasional Papers 1916, Banco de España.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Mertzanis, Charilaos, 2024. "Central bank policies and green bond issuance on a global scale," Energy Economics, Elsevier, vol. 133(C).
    2. Fischer, Lion & Rapp, Marc Steffen & Zahner, Johannes, 2024. "Central banks sowing the seeds for a green financial sector? NGFS membership and market reactions," IMFS Working Paper Series 198, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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    More about this item

    Keywords

    central banks; sustainable finance; climate change;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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