<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Climate change is one of the biggest risks to the global financial system and to the economies of perhaps every nation upon this planet. Central banks could play a prominent role in protecting us from this economic upheaval. This paper develops an objective Green Central Bank Index. The index is constructed by identifying nine distinct policy tools which central banks can deploy to further their countries’ climate resilience. Central banks can be graded against each of these areas using publicly available information, and the grades combined into an index using appropriate weights. We can therefore measure the intensity with which individual central banks engage with the green agenda and compare to their peers. We apply our Green CB Index to thirteen of the largest and most developed economies in the world. We identify three distinct groups of countries: leaders in climate change who actively use the central banks power and influence to encourage their economies to become sustainable; a second set of countries who either publicly announce their policies to reduce financial risks from climate change but are yet to deploy their full arsenal in support of climate, or the reverse – keeping a low public profile but nonetheless discretely using the position of the central bank to further climate goals; and a final group of countries who are yet to prioritise climate issues. The Index highlights the differing policy challenges facing these three separate central bank groups.</p>
</abstract>

Climate change is one of the biggest risks to the global financial system and to the economies of perhaps every nation upon this planet. Central banks could play a prominent role in protecting us from this economic upheaval. This paper develops an objective Green Central Bank Index. The index is constructed by identifying nine distinct policy tools which central banks can deploy to further their countries’ climate resilience. Central banks can be graded against each of these areas using publicly available information, and the grades combined into an index using appropriate weights. We can therefore measure the intensity with which individual central banks engage with the green agenda and compare to their peers. We apply our Green CB Index to thirteen of the largest and most developed economies in the world. We identify three distinct groups of countries: leaders in climate change who actively use the central banks power and influence to encourage their economies to become sustainable; a second set of countries who either publicly announce their policies to reduce financial risks from climate change but are yet to deploy their full arsenal in support of climate, or the reverse – keeping a low public profile but nonetheless discretely using the position of the central bank to further climate goals; and a final group of countries who are yet to prioritise climate issues. The Index highlights the differing policy challenges facing these three separate central bank groups.

The Green Central Bank Index

University of Warwick, Independent Researcher

University of Warwick, CEPR; UK Competition and Markets Authority

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"The Green Central Bank Index"}

Climate change is one of the biggest risks to the global financial system and to the economies of perhaps every nation upon this planet. Central banks could...

The Green Central Bank Index

Publié en ligne: 07 juin 2024

Pages: 5 - 39

Reçu: 22 févr. 2023

Accepté: 13 sept. 2023

DOI: https://doi.org/10.2478/jcbtp-2024-0011

Mots clés
central banks, green financial system, low-carbon economy, financial risks from climate change

© 2024 Natalia Koshel et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

The Green Central Bank Index

Publié en ligne: 07 juin 2024

Pages: 5 - 39

Reçu: 22 févr. 2023

Accepté: 13 sept. 2023

DOI: https://doi.org/10.2478/jcbtp-2024-0011

Mots cléscentral banks, green financial system, low-carbon economy, financial risks from climate change

© 2024 Natalia Koshel et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Mots clés
central banks, green financial system, low-carbon economy, financial risks from climate change