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Targeting a sustainable recovery with Green TLTROs

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  • Klooster, Jens van 't
  • van Tilburg, Rens

Abstract

Since their introduction in 2014, the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTROs) have become ever larger and ever more attractive for banks. As they increasingly drive bank lending, TLTROs often enable unsustainable investments. This report proposes Green TLTROs, which are refinancing operations that provide banks with cheap funding if they lend in accordance with the EU’s taxonomy of green activities. We discuss the legality of such a market-based programme and show that it is compatible with a level playing field between banks and the singleness of monetary policy. We outline several possible technical designs of the Green TLTROs and suggest a pilot programme for energy efficient housing that can quickly be implemented.

Suggested Citation

  • Klooster, Jens van 't & van Tilburg, Rens, 2020. "Targeting a sustainable recovery with Green TLTROs," SocArXiv 2bx8h_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:2bx8h_v1
    DOI: 10.31219/osf.io/2bx8h_v1
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    Cited by:

    1. Fang, Fang & Si, Deng-Kui & Hu, Debao, 2023. "Green bond spread effect of unconventional monetary policy: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 398-413.

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