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Green Central Banking: A New Role For The Central Banks In The Financial System

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  • Omer Faruk Tekdogan

    (University of Ankara, Türkiye)

Abstract

The financial sector plays a key role in the transition to a more sustainable and low-carbon economy. Central banks as one of the major actors in the financial system, have the ability to influence the adoption of green finance and reduce risks associated with climate change. Green central banking aims to give central banks’ operations, regulations, and goals a more sustainability-related thought. This paper uses a qualitative analysis method based on the existing literature. In addition to exploring the concept of “green central banking,†which is just starting to gain traction, this study addresses potential central bank responsibilities and tasks in the field of sustainable finance. This study also emphasizes the difficulties and dangers of implementing green central banking, including the possible conflicts between financial stability and environmental goals. The article provides a comparative examination of the methods used by central banks as it looks at the state of green central banking in various parts of the world. Ultimately, this study promotes central banks to take an initiative-taking stance in the transition to a greener and more resilient financial system and believes that green central banking can be a critical tool for accomplishing sustainable development goals.

Suggested Citation

  • Omer Faruk Tekdogan, 2023. "Green Central Banking: A New Role For The Central Banks In The Financial System," Journal of Central Banking Law and Institutions, Bank Indonesia, vol. 2(2), pages 301-326, Juli.
    • Handle: RePEc:idn:jclijn:v:2:y:2023:i:2e:p:301-326
    DOI: https://doi.org/10.21098/jcli.v2i2.170
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