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Greening collateral frameworks

Author

Listed:
  • Dafermos, Yannis
  • Gabor, Daniela
  • Nikolaidi, Maria
  • van Lerven, Frank

Abstract

Central bank collateral frameworks play a powerful role in contemporary market-based financial systems, affecting demand for financial assets and access to finance. However, existing collateral frameworks suffer from a carbon bias: they create disproportionately better financing conditions for carbon-intensive activities. This paper highlights the need to green the collateral frameworks and explores how central banks can incorporate environmental criteria into these frameworks.

Suggested Citation

  • Dafermos, Yannis & Gabor, Daniela & Nikolaidi, Maria & van Lerven, Frank, 2022. "Greening collateral frameworks," LSE Research Online Documents on Economics 116640, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:116640
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    File URL: http://eprints.lse.ac.uk/116640/
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    References listed on IDEAS

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    1. Jean‐Stéphane Mésonnier & Charles O'Donnell & Olivier Toutain, 2022. "The Interest of Being Eligible," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(2-3), pages 425-458, March.
    2. Jakob Vestergaard & Daniela Gabor, 2022. "Should central bank liquidity be a vehicle for fiscal disciplining?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(3), pages 491-509.
    3. Bindseil, Ulrich & Corsi, Marco & Sahel, Benjamin & Visser, Ad, 2017. "The Eurosystem collateral framework explained," Occasional Paper Series 189, European Central Bank.
    4. Dirk Schoenmaker, 2021. "Greening monetary policy," Climate Policy, Taylor & Francis Journals, vol. 21(4), pages 581-592, April.
    5. Andrew McConnell & Boyan Yanovski & Kai Lessmann, 2022. "Central bank collateral as a green monetary policy instrument," Climate Policy, Taylor & Francis Journals, vol. 22(3), pages 339-355, March.
    6. Alogoskoufis, Spyros & Dunz, Nepomuk & Emambakhsh, Tina & Hennig, Tristan & Kaijser, Michiel & Kouratzoglou, Charalampos & Muñoz, Manuel A. & Parisi, Laura & Salleo, Carmelo, 2021. "ECB’s economy-wide climate stress test," Occasional Paper Series 281, European Central Bank.
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    Cited by:

    1. Skyrman, Viktor, 2024. "Industrial policy, progressive derisking, and the financing of Europe's green transition," Working Papers 78, Austrian Foundation for Development Research (ÖFSE).

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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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