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Climate Change and Monetary Policy: Risks, Instruments, and Chances: In-Depth Analysis ; Requested by the ECON Committee

Diskussionspapiere extern

Sonja Dobkowitz, Pia Hüttl, Alexander Kriwoluzky, Jana Wittich

Bruxelles: European Parliament, 2023, 23 S.
(Monetary Dialogue Papers ; November 2023)


Rising inflation complicates the alignment of the ECB’s policies with the Paris Agreement. This paper provides novel evidence for inflationary pressures arising from natural disasters. We then discuss the effectiveness of monetary instruments to boost a green transition, concluding that the scope of policy measures used thus far is limited. As additional measures, we advise active rebalancing of the ECB’s bond holdings towards greener issuers, enforcing stricter disclosure standards, and differentiating lending facilities in favour of green investments.

Sonja Dobkowitz

Research Associate in the Macroeconomics Department

Pia Hüttl

Research Associate in the Macroeconomics Department

Jana Wittich

Ph.D. Student in the Graduate Center

Alexander Kriwoluzky

Head of Department in the Macroeconomics Department