Have central banks caused in the past more climate change due to an ultra-long period of low-interest rates and QE, or have the green initiatives sidelined by more and more central banks helped contain climate change?
Cherish research.
If you had read the statutory tasks of the ECB (see https://www.ecb.europa.eu/ecb/tasks/html/index.en.html) you would have realized that changing the lifestyles of European populations is not within their competence. Incidentally, in democratic systems, this lies with the individual citizens, who express their political preferences through their voting behavior with regard to the various parties. If you personally want to bring about a change in lifestyle, you have to look for political majorities and not blame political institutions with other tasks!
Dear Hans-Georg, thank you very much for your cherished input. Looks like the institutional design does not reflect the systemic network and its negative entropies appropriately.
Have a look at the research on how QE in Europe has boosted brown investments in the past. Clearly, the much-needed monetary institutions are often misused as scapegoats. This is for sure not my intention.
https://www.lse.ac.uk/granthaminstitute/publication/the-climate-impact-of-quantitative-easing/
Central banks have a complex relationship with climate change, and their impact on the environment is not straightforward. On the one hand, as you mentioned, ultra-low interest rates and quantitative easing policies can incentivize unsustainable investments in fossil fuels, which contribute to climate change. Additionally, central banks have historically focused primarily on their monetary policy mandates, which do not explicitly include environmental considerations.
On the other hand, many central banks have started to recognize the risks posed by climate change to financial stability and have taken steps to address them. For example, some central banks have started to incorporate climate-related risks into their risk assessments and stress tests, while others have created new tools and frameworks to support sustainable finance.
Overall, while central banks may have contributed to climate change in the past through their policies, there is evidence that they are increasingly taking steps to mitigate their impact and promote sustainable finance. However, the historical perspective is still limited, and it will take time to evaluate the effectiveness of these initiatives.
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