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The Greening of the Economic and Monetary Union

Author

Listed:
  • Steinbach, Armin

    (HEC Paris)

Abstract

All pillars of the Economic and Monetary Union (EMU) recently unleashed an array of measures to transform the economy towards climate neutrality. With the Green Deal, the ECB’s Strategy Review and the growing body of sustainable finance legislation, climate considerations have entered the traditional mandates governing the conduct of financial, fiscal and monetary policy. The cross-sectional nature of climate issues reinforces the interdependence and coordination of EMU policies. The present study explores changes to EMU architecture and discusses the institutional and legal implications of the novel role of climate in the coordination of EMU policies. It addresses the relationship between Treaty mandate and policy leeway, specifically the way in which the European Central Bank extends its focus on price stability to account for climate considerations and the fiscal legal framework relies on flexibility to incentivize climate investment. It also tracks the emergence of climate stability as an EMU concept adding to existing concepts of price, fiscal and financial stability.

Suggested Citation

  • Steinbach, Armin, 2022. "The Greening of the Economic and Monetary Union," HEC Research Papers Series 1450, HEC Paris.
    • Handle: RePEc:ebg:heccah:1450
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    More about this item

    Keywords

    Climate policy; monetary union; sustainability;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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