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Archive » April 2025 » Should central banks be involved in sustainable finance?

Should central banks be involved in sustainable finance?

John Thornton
April 2025 - n. 4
Keywords: Sustainable finance, central bank policy, banks, environment
Jel codes: E58, F64, G21, Q01, Q54

Much of the academic literature on role of central banks argues for the adaption of monetary policy instruments to encourage «green» activities and for integrating climate-related risks into financial stability frameworks. I argue that using monetary policy to direct credit flows is a discredited policy and that central banks should focus on meeting the challenges that climate change poses to financial stability.

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