The Impact of Green Central Banking on Green Finance


Demirel S.

7. Uluslararası Ekonomi ve Finans Konferansı Geleceğin Ekonomik Düzeni: İklim Değişiklikleri, Enerji Darboğazı ve Savaşlar Karşısında İktisadın Zorlukları Çevrimiçi Konferans, İstanbul, Turkey, 5 - 06 October 2023, pp.17-37

  • Publication Type: Conference Paper / Full Text
  • City: İstanbul
  • Country: Turkey
  • Page Numbers: pp.17-37
  • Istanbul Gelisim University Affiliated: Yes

Abstract

ABSTRACT RESEARCH PROBLEM. The responsibility for financial and macroeconomic stability clearly lies with central banks. At the same time, central banks today have an important advantage in mitigating the adverse effects of climate change on the financial system. Therefore, central banks should address climate-related and other environmental risks at a systemic level. Moreover, through their regulatory oversight of money, credit and the financial system, central banks are in a strong position to support the development of green finance models and ensure that environmental and carbon risk is appropriately priced by financial institutions.

RESEARCH QUESTIONS. H1: Green central banks have a positive impact on the development of green finance.

ORIGINALITY/VALUE. The research is an original study in its field.

L. LITERATURE REVIEW. Recent literature has been reviewed in the research.

METHODOLOGY. In the study, domestic and foreign literature was reviewed and analyzed accordingly.

F. FINDINGS. As a result of the domestic and foreign literature review, it is possible to say that green central banks have a positive impact on the development of green finance. RESULTS AND CONCLUSIONS. The results of the studies on the subject in the literature overlap with this study. Some of these studies are as follows. Breitenfellner et al. (2019) examined the contribution of Central Banks to Green Finance in their study. In the study, it is stated that central banks can and should contribute to making the economy and financial system more sustainable and to the spread of green finance. Gunningham (2020) examined central banks, financial regulators and climate finance in his study. The main contribution of the study is to show how Central Banks and Financial Regulators can best accelerate the low-carbon financial transition. Dietsch et al. (2022) examined green central banking in detail in their study. The possible outcomes of green central banking on the impact of green finance discussed in the study can be expressed as supporting green finance, risk assessment, developing regulatory standards related to green finance, providing awareness and educational opportunities related to green finance.