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Finance, money and climate change

As fighting climate change becomes the world’s top post-pandemic priority, financial intermediaries, their regulators and central banks have all been called to contribute. A major new research report exploring the scope and limits of green finance and the possibility of ‘greening’ monetary policies will be launched at an online panel discussion hosted by Europe’s leading economic policy journal on Thursday 21 October 2021 at 17:00 CEST.

Markus Brunnermeier of Princeton University and CEPR, who has co-authored the study with former top French and international policy-maker Jean-Pierre Landau of Sciences Po, will present a new framework for thinking about finance, money and climate change – identifying the trade-offs and key choices to be made.

His presentation will be followed by a discussion with Anna Breman, deputy governor of Sveriges Riksbank, the central bank of Sweden, and Adam Tooze, Kathryn and Shelby Cullom Davis Professor of History at Columbia University, moderated by Tim Phillips, presenter of CEPR’s Vox Talks Economics podcast.

For more information visit the Economic Policy journal website.

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Eric Jondeau, Benoit Mojon, Cyril Monnet, 16 April 2021

The momentum towards greening the economy implies transition risks that represent new threats to financial stability. The risk of a run on brown assets, similar to that seen during the subprime crisis, can have widespread destabilising effects. This column proposes a liquidity backstop with an access fee proportional to carbon emissions, and a borrowing rate independent of emissions. It argues that such a facility will help green the economy, re-establish production efficiency, and avoid highly inefficient runs. An orderly reallocation of capital to a greener economy can lift long-term growth and facilitate the post-Covid recovery.

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