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Green public finance: The role of central banks

In: Research Handbook on Environmental, Social and Corporate Governance

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  • Jörn Axel Kämmerer

Abstract

In the wake of the Paris Agreement, various central banks have adopted measures that aim to decarbonize their own portfolios by means of prioritizing the purchase of ‘green bonds’. This programmatic element is novel in monetary policy, which traditionally has been market neutral. With a focus on the European Central Bank (ECB), which is developing its own ‘green’ purchase strategy, this chapter sets out the legal conflicts which arise between monetary policy goals and commitment to sustainability. As the ECB, an EU body, is subject to the principle of conferral, any conduct of a policy other than monetary and any unallowed pursuit of goals would qualify as ultra vires. Balancing the existing horizontal Treaty clause on sustainability that is also binding on the ECB, and its mission as fixed by primary law, we may hold that its monetary policy may at least take on a ‘green tinge’.

Suggested Citation

  • Jörn Axel Kämmerer, 2024. "Green public finance: The role of central banks," Chapters, in: Thilo Kuntz (ed.), Research Handbook on Environmental, Social and Corporate Governance, chapter 11, pages 249-267, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21010_11
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    File URL: https://www.elgaronline.com/doi/10.4337/9781802202533.00021
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