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Can unconventional monetary policy contribute to climate action?

Author

Listed:
  • Alice Eliet-Doillet

    (Ecole Polytechnique Fédérale de Lausanne)

  • Andrea Maino

    (University of Geneva)

Abstract
This paper investigates the impact of central banks when supporting policies aiming at greening the financial system. The July 2021 Monetary Policy Strategy Review of the European Central Bank unexpectedly dedicated a whole workstream to climate change. The announcement had a significant effect on the pricing and issuance of green bonds in the Eurozone. We find that ECB eligible green bonds’ Yield-to-Maturity decreased following the announcement when compared to equivalent conventional bonds. Firms incorporated in the Eurozone reacted to the announcement by increasing the amount of green bond issued, for both the segments of ECB-eligible and non-ECB-eligible green bonds.

Suggested Citation

  • Alice Eliet-Doillet & Andrea Maino, 2022. "Can unconventional monetary policy contribute to climate action?," Swiss Finance Institute Research Paper Series 22-35, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2235
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4090616
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    Citations

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    Cited by:

    1. Francesco Giovanardi & Matthias Kaldorf & Lucas Radke & Florian Wicknig, 2023. "The Preferential Treatment of Green Bonds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 657-676, December.
    2. Rüdiger Fahlenbrach & Eric Jondeau, 2023. "Greening the Swiss National Bank’s Portfolio," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(4), pages 792-833.

    More about this item

    Keywords

    Climate Change; Central Banks; Green Bonds; Carbon Emissions; Quantitative Easing; Monetary Policy; ESG;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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