Dirk Schoenmaker, 17 April 2019

The ECB’s market-neutral approach to monetary policy undermines the general aim of the EU to achieve a low-carbon economy. The column argues that steering the allocation of the Eurosystem’s assets and collateral towards low-carbon sectors would reduce the cost of capital for these sectors relative to high-carbon sectors. A modest titling approach could accelerate a transition to a low-carbon economy, and could be implemented without interfering with the priority of price stability.

CEPR Policy Research