Vollme , Uwe
A icle
G eening cen al bank policies: Eu o a ea s non-eu o a ea
EU membe s a es
In e economics
Sugges ed Ci a ion: Vollme , Uwe (2024) : G eening cen al bank policies: Eu o a ea s non-eu o a ea
EU membe s a es, In e economics, ISSN 1613-964X, Sciendo, Wa saw, Vol. 59, Iss. 4, pp. 236-242,
h ps://doi.o g/10.2478/ie-2024-0047
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In e economics 2024 | 4
236
Cen al Bank Policies DOI: 10.2478/ie-2024-0047
In e economics, 2024, 59(4), 236-242
JEL: E58, E61, Q58
Uwe Vollme
G eening Cen al Bank Policies: Eu o A ea s
Non-Eu o A ea EU Membe S a es
Clima e change has become ele an o cen al banks wo ldwide, bu hey a e adop ing hei
ins umen s a di e en speeds. This a icle compa es he eac ions o he Eu osys em wi h
hose o he o he EU cen al banks. Do hese cen al banks di e in hei e o s o make hei
own policies “g eene ”? The a icle a gues ha he op ions and cons ain s o eac o clima e
change di e ge be ween cen al banks.
Uwe Vollme , Leipzig Uni e si y, Ge many.
© The Au ho (s) 2024. Open Access: This a icle is dis ibu ed unde he
e ms o he C ea i e Commons A ibu ion 4.0 In e na ional License
(h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e
o Economics.
Clima e change is a global p oblem and he e is a g ea
need o in e na ional coo dina ion o p e en “ ee iding”
in clima e policy (No dhaus, 2015). This includes cen al
banks as di e gen policies could igge inancial ca -
bon leakage, i.e. a shi o “b own” in es men inance
in o inancial ma ke s wi h weake clima e isk disclosu e
equi emen s (Benincasa e al., 2022). The e o e, a ious
cen al banks and inancial egula o s wo ldwide ha e
joined oge he o o m he Ne wo k o G eening he Fi-
nancial Sys em (NGFS), wi h he aim o s eng hening he
ole o he inancial sec o in managing isk and mobilis-
ing capi al o low-ca bon in es men s. Howe e , such
clima e clubs only make ecommenda ions, lack sanc ion
mechanisms and a e essen ially olun a y.
This a icle asks why cen al banks adap hei policy
amewo ks o clima e a ge s wi h di e ging in ensi y. Is
his because cen al banks canno become g eene o be-
cause hey do no wan o do so? Some s udies suppo
he o me and poin o legal cons ain s, especially poli-
cy manda es (Dikau & Volz, 2021; Pa ajon Skinne , 2021;
Calliess & Tuncel, 2023). This lea es open he ques ion
abou o he po en ial poli ical cos s ha may make i less
a ac i e o indi idual cen al banks o pa icipa e in he
igh agains clima e change. Some pape s analyse he
poli ical economy o g eening cen al banking (Simandan
& Paun, 2021; Cullen, 2023) and add ess he incen i es
and obs acles ha g een cen al bank policies ace, bu
do no explain why cen al banks wi h simila manda es
weigh clima e p o ec ion goals di e en ly.
We conside clima e policies in he Eu opean Union and
compa e he Eu osys em wi h cen al banks om EU
membe s a es ou side he eu o a ea (EU8).1 In 2019, he
EU8 oge he accoun ed o 26.6% o all CO2 emissions in
he EU.2 We a gue ha all banks in he sample sha e simi-
la manda es and show ha some o he cen al banks
ha e g ea e di icul y han o he s in making hei ins u-
men s clima e neu al. Resul s sugges ha i is no only
cen al bank laws ha make i di icul o p o ec agains
clima e change, bu also coun y-speci ic incen i es and
es ic ions.
Clima e change and cen al bank policies
The li e a u e on clima e change and cen al bank policy
consis s o wo s ands.3 One s and conside s he con-
sequences o clima e change and o clima e policy meas-
u es o inancial s abili y and he abili y o cen al banks
o ul il hei mone a y policy manda e. Clima e change is
impo an o cen al banks o se e al easons (Schna-
bel, 2021a). Fi s , i a ec s sho - e m in la ion dynamics
and inc eases medium- e m mac oeconomic ola ili y
(Can elmo e al., 2023). Second, clima e isks a e no ye
ully e lec ed in asse p ices (E en e al., 2022) and a -
ings do no e lec he isk posi ion (Ne wo k o G een-
ing he Financial Sys em, 2018). Once hese isks ma e-
ialise, he banking sec o may su e om losses, which
will a ec mone a y policy ansmission (Acha ya e al.,
2020). Thi d, clima e change weakens g ow h p ospec s,
inc eases unce ain y and aises he isk o na u al disas-
e s; his lowe s he long- e m eal in e es a e (Bylund &
1 Balga ska Na odna Banka (BNB), Banca Națională a României (BNR),
Česká Ná odní Banka (CNB), Danma ks Na ionalbank (DNB), H a -
ska Na odna Banka (HNB), Magya Nemze i Bank (MNB), Na odowy
Bank Polski (NBP), and S e iges Riksbank (SRB). We handle C oa ia
as a non-eu o coun y because i only ecen ly joined he eu o a ea.
2 h ps://www.s a is a.com/s a is ics/789024
3 Al hough banking supe ision in Denma k, Poland and Sweden does
no lie wi h he cen al bank bu wi h sepa a e supe iso y au ho i ies,
we will con inue o speak o “cen al bank policies”.
ZBW – Leibniz In o ma ion Cen e o Economics 237
Cen al Bank Policies
Jonsson, 2020) and may educe he e ec i eness o con-
en ional mone a y policy ins umen s.
The o he s and asks o wha ex en cen al banks a e
able o in luence clima e change and mi iga e i s econom-
ic consequences. Mone a y policy in luences no only he
in la ion a e bu also economic ac i i y, which ma e s o
clima e change because CO2 emissions and economic
ac i i y a e s ongly co ela ed (Khan e al., 2019). In o -
de o in luence clima e change, cen al banks may p o-
ac i ely add ess his issue and apply a clima e-adjus ed
Taylo ule, which adds an emissions gap as a hi d a ge
o he adi ional a ge s o in la ion and he ou pu gap.
The associa ed eac ion coe icien measu es he espon-
si eness o he policy in e es a e o de ia ions o CO2
emissions om hei s eady-s a e alue. In his case, he
cen al bank could un in o a dilemma because he e is a
isk o o e bu dening mone a y policy (Chen e al., 2021).
Quan i a i e easing (QE) could be used o clima e-p o ec-
ion pu poses. One way would be a a ge ed p i ileging o
g een bonds which inance g een p ojec s ha p omo e cli-
ma e goals o se e en i onmen al p o ec ion. The e ec i e-
ness o “g een QE” depends on how i is implemen ed whe e
p ocedu e and speed play a ole (Fe a i & Nispi Landie,
2020). Wi h espec o p ocedu e, wo possibili ies exis : he
cen al bank keeps i s o al secu i ies holdings cons an and
sells b own bonds in exchange o g een bonds; al e na-
i ely, i inc eases i s o al secu i ies holdings and acqui es
g een bonds by issuing i s own liabili ies. In bo h cases, he
g een sec o ’s inancing cos s dec ease: he b own sec o ’s
cos s inc ease only in he i s scena io, esul ing in a de-
c ease in (new) CO2 emissions. Howe e , he esul ing emis-
sion educ ion does no lead o a signi ican dec ease in he
(cumula i e) CO2 s ock in he a mosphe e.
In e ms o speed, he e a e he ollowing op ions: a g ad-
ual inc ease in secu i ies pu chases, a on -loaded g een
QE o a empo a y g een QE, i.e. he cen al bank i s
buys g een bonds and hen le s hei holdings all (Fe -
a i & Nispi Landie, 2020). The impac on CO2 emissions is
g ea e wi h on loading, bu e en in his case, he impac
on he o al s ock o CO2 is small. The e is also he pos-
sibili y ha g een QE inc eases (new) emissions, p o ided
ha g een and b own consume goods a e complemen-
a y and he expansion o p oduc ion o g een goods also
inc eases he p oduc ion o b own goods.
An al e na i e o g een QE would be he p e e en ial ea -
men o g een bonds in he colla e al amewo k. By il ing
he amewo k owa ds g een bonds, he cen al bank a -
ec s he ela i e p ice o g een and b own bonds because
banks can use g een bonds mo e easily o se le liquidi y
de ici s. This may ini ia e a pe manen shi owa ds g een
echnology bu his shi is small and accompanied by
ad e se side e ec s, such as highe isk- aking by banks
(Gio ana di e al., 2022).
Ano he al e na i e would be o di e en ia e minimum
ese e equi emen s o banks acco ding o he ca -
bon oo p in o hei liabili ies (Campiglio, 2016). Cen-
al banks could also design g een a ge ed long- e m
e inancing ope a ions (T-LTRO) ha p o ide banks wi h
cheap unding i hey lend o sus ainable ac i i ies ( an ’
Kloos e & an Tilbu g, 2020). This equi es an app op i-
a e axonomy o iden i y sus ainable ac i i ies, which is
cu en ly una ailable. A p og amme ha ies e inancing
o he eno a ion o ene gy-ine icien housing would be
easie o implemen (Ba saikhan & Jou dan, 2021). Finally,
cen al banks could use mac op uden ial ins umen s o
ini ia e a g een ansi ion. G een di e en ia ed capi al e-
qui emen s (GDCR) can slow down clima e change and
educe he associa ed isks. The e ec is a he small bu
inc eases when GDCR a e used oge he wi h a g een is-
cal policy (Da e mos & Nikolaidi, 2021).
G eening cen al bank policy
The EU has se i sel he goal o educing ne g eenhouse
gas emissions by a leas 55% by 2030, bu he necessa y
iscal policy ins umen s ha e no ye been de eloped. A
ca bon ax cu en ly exis s in only some membe s a es,
because i s in oduc ion has me wi h conside able poli ical
esis ance om axpaye s. The key ins umen is emissions
ading, bu so a only a ew sec o s o he economy a e in-
cluded. As a esul , ca bon p ices, bo h in he o m o axes
and ading schemes, we e ela i ely low in he EU (A gous i
e al., 2023). P essu e on cen al banks o s ep in as “clima e
escue s o las eso ” (Bol on e al., 2020) is g owing.
Wha can cen al banks do?
The possibili ies o EU cen al banks o ac i ely pa ici-
pa e in he igh agains clima e change a e speci ied in
A icle 127 TFEU. The p ima y objec i e o he Eu opean
Sys em o Cen al Banks is o main ain p ice s abili y.
The e is also a du y o suppo he gene al economic poli-
cies in he Eu opean Union, as long as p ice s abili y is no
jeopa dised. Mone a y policymake s should hus selec
he policy op ions ha con ibu e mos o p ice s abili y. I
wo o mo e policy al e na i es con ibu e equally o p ice
s abili y, hey can be p io i ised acco ding o hei suppo
o seconda y objec i es.
EU cen al banks make di e en use o his oom o manoeu-
e. The Eu opean Cen al Bank (ECB) assumes a “seconda y
objec i e” and de i es om i s manda e an obliga ion o pu -
sue clima e- iendly policies – as long as p ice s abili y is no
In e economics 2024 | 4
238
Cen al Bank Policies
endange ed (Elde son, 2021). F om he ECB’s poin o iew,
clima e p o ec ion measu es p omo e p ice s abili y because
hey ha e a s abilising e ec on mac oeconomic dynamics,
educe he isks associa ed wi h clima e change and p e en
a decline in he na u al a e o in e es (Schnabel, 2021b).
Cen al bank laws o he EU8 allow simila ly b oad in e -
p e a ions. The p ima y objec i e is always o main ain
p ice s abili y (o a low and s able in la ion); as long as
his is no jeopa dised, he cen al bank should suppo
he gene al policy. In Bulga ia, he legisla o also equi es
he cen al bank o p omo e he policy o sus ainable
and non-in la iona y g ow h. The new cen al bank law in
Hunga y goes u hes in gi ing he cen al bank a g een
manda e and in equi ing he bank o suppo he go e n-
men ’s en i onmen al policy.
P o ided A icle 127 TFEU is no iola ed, cen al banks
ha e a ious op ions o gea ing hei ins umen s mo e
closely o clima e policy. Measu es can be classi ied
in o h ee ca ego ies: passi e ac ions ha aise public
awa eness o clima e issues, p e en i e/p uden ial ac-
ions h ough which cen al banks p o ec hemsel es
om clima e change isks and p oac i e/p omo ional ac-
ions h ough which cen al banks pa icipa e in slowing
clima e change (Bone a e al., 2021). The i s ca ego y
includes NGFS membe ship, public s a emen s highligh -
ing clima e change and exe ing poli ical p essu e on i-
nancial sec o ac o s o disclose clima e isks. The sec-
ond ca ego y includes e o s by cen al banks o disclose
hei own ca bon oo p in , o e i y hei ulne abili y o
clima e isks h ough “clima e s ess es ing” and o e-
duce he sha e o b own o o he clima e- isk asse s in
hei balance shee . In addi ion, cen al banks need o
adap hei mone a y policy s a egy o clima e change.
The las ca ego y co e s measu es o inc ease demand o
sus ainable inancial secu i ies. This includes inc easing he
sha e o g een inancial asse s in own po olio ha a e no
held o mone a y policy pu poses. In addi ion, he sha e
o g een asse s in o eign exchange ese es o in domes-
ic secu i ies held o mone a y policy pu poses can be in-
c eased. Cen al banks can base hei lending o c edi in-
s i u ions on sus ainabili y c i e ia by calib a ing hai cu s ac-
co dingly o by including sus ainabili y c i e ia in he colla -
e al amewo k. Minimum ese e a ios o minimum capi al
equi emen s can also be aligned wi h sus ainabili y c i e ia.
Wha ha e cen al banks done so a ?
All cen al banks a e membe s o he NGFS, excep he
BNB, CNB and NBP.4 While cen al bank communica ion
4 The Polish Financial Supe ision Au ho i y (KNF) is a membe .
on clima e change has inc eased s ongly (A seneau e
al., 2022), hese opics a e mainly ound in publica ions o
he ECB, MNB, DNB and SRB, as well as some na ional
cen al banks wi hin he Eu osys em. Tex analyses show
ha clima e change is now men ioned almos as o en as
in la ion in o icial speeches by ECB ep esen a i es. In
con as , clima e aspec s in o he EU8 cen al banks play
only a mino ole; he e, s a emen s on pandemics, dig-
i isa ion o paymen sys ems, in ech o banking supe i-
sion domina e (Dey is, 2023).
The ECB e iews he managemen o clima e isks by he
banks i supe ises, se ing hem s agge ed deadlines on
an ins i u ion-by-ins i u ion basis. I expec s banks o ad-
equa ely assess hei clima e isks and inco po a e hem
in o hei isk managemen (ECB, 2022). Riksbank also
in ends o conduc “clima e s ess es s” and o analyse
how a sha p inc ease in he p ice o emission igh s could
a ec he banks h ough hei lending o non- inancial
co po a ions (SRB, 2023b). I has no ye explained how
i will espond i indi idual banks ail he es . The MNB
has also asked he banks o assess he en i onmen al
isks and impac s o hei ope a ions and po olios (MNB,
2021a, 2022). In con as , manda ed clima e isk disclo-
su es a e no ye epo ed o he o he cen al banks. The
NBP does no publish numbe s on he ca bon oo p in o
i s asse s. The BNR has announced i will moni o clima e
change isks o he banking sec o and conduc annual
s ess es s on clima e isk- ela ed issues (BNR, 2021).
Simila announcemen s ha e been made by he HNB
(2021).
Only some cen al banks so a ha e aken p e en i e
o p oac i e measu es. The Eu osys em announced in
i s s a egy e iew ha i would ake he consequences
o clima e change in o accoun . The Go e ning Council
will adap i s mone a y policy amewo k and gi e g ea e
weigh o clima e c i e ia in disclosu e, isk assessmen ,
co po a e sec o asse pu chases and he mone a y col-
la e al amewo k. A ime able is se o he implemen a-
ion o hese aspec s. Howe e , he ECB does no plan
o “lean agains he wind”, i.e. i will no eac o clima e
change wi h in e es a e policy, bu will igh en mone a y
policy i necessa y o achie e p ice s abili y (Schnabel,
2021c).
The key p e en i e measu e aken by cen al banks is o
change he composi ion o hei secu i ies po olio in he
di ec ion o asse s wi h low clima e isks. Only he Dan-
ish and Swedish cen al banks eco d he clima e isks
o hei ne o eign claims and adjus he composi ion o
hei o eign exchange ese es acco dingly. The DNB ex-
cludes companies ha iola e sus ainabili y goals om i s
o eign exchange ese e. I is also examining how i can
ZBW – Leibniz In o ma ion Cen e o Economics 239
Cen al Bank Policies
measu e whe he he companies in which he o eign ex-
change ese e is in es ed a e ansi ioning in alignmen
wi h he Pa is goals (Inghol e al., 2021). Riksbank has
begun o conside sus ainabili y aspec s in managing he
o eign exchange ese es. I measu es and epo s he
ca bon oo p in o i s o eign go e nmen bond holdings
in o eign ese es and has sold some asse s wi h exces-
si e ca bon in ensi y (SRB, 2023a, 2023b).
In con as , o he cen al banks do no adjus hei o -
eign ese es o clima e goals. In he case o he ECB,
a clima e policy o ien a ion o o eign ese es has no
ye been planned. The NBP in es s he majo i y o i s
o eign ese es in go e nmen bonds o coun ies wi h
high c edi a ings, which a e cha ac e ised by he highes
le el o sa e y and liquidi y. The non-go e nmen secu i-
ies in he in es men po olios a e mainly hose issued
by in e na ional ins i u ions and go e nmen agencies. A
po ion o he ese es is held in he o m o sho - e m
deposi s wi h banks wi h high c edi a ings (NBP, n. d.).
The emaining cen al banks do no p o ide in o ma ion
abou he ca bon oo p in o hei o eign ese es.
The ECB has al eady compiled i s po olio o “o he se-
cu i ies” acco ding o ecological c i e ia; howe e , i only
accoun s o jus unde 10% o he o al secu i ies hold-
ings o he Eu osys em. Quan i a i ely much mo e signi i-
can a e he “secu i ies o mone a y policy pu poses”,
which a e pu chased unde he Public Sec o Pu chase
P og amme (PSPP) and he Co po a e Sec o Pu chase
P og amme (CSPP) and now comp ise a olume o €5 il-
lion. So a , Eu osys em has delibe a ely applied b oad
c i e ia o he eligibili y o secu i ies o pu chase, so ha
en i onmen al aspec s played nei he a posi i e no a
nega i e ole. I has “bough he ma ke ” in o de o a oid
p ice dis o ions in indi idual ma ke segmen s and no o
con adic he p inciple o an open ma ke economy wi h
ee compe i ion (De San is e al., 2018). Because he e
a e indica ions ha he asse s pu chased by he Eu osys-
em in he CSPP a e mainly om high emission in ensi y
companies (Papou si e al., 2021), he Eu osys em plans
o pu sue a “ il ing s a egy” in he u u e and g adu-
ally adjus i s pu chases mo e o sus ainabili y c i e ia. A
comple e s op o he pu chase o b own inancial asse s
is no planned, because his could des oy he incen i e
o hese sec o s o in es in clima e- iendly echnologies
(Schnabel, 2021b, 2021c, 2022).
Minimum ese e a ios do no play an impo an ole in
he Eu osys em’s mone a y policy amewo k and he e
a e cu en ly no plans o adjus hem in line wi h clima e
policy. Ins ead, he ECB in ends o adjus he colla e al
lis acco dingly; sus ainabili y-linked bonds a e cu en ly
al eady included. Howe e , a ine adjus men o lending
o comme cial banks has so a ailed o p o ide a su -
icien me ic, making i di icul o sepa a e “g een” om
“b own” loans, so ha he Eu osys em canno use i s T-
LTRO o clima e policy pu poses (Schnabel, 2022).
The MNB s a ed he G een Home P og amme and p o-
ides e inancing loans a a low in e es a e o comme -
cial banks. This esou ce can be used o g an mo gage
loans o he banks’ e ail cus ome s on a ou able e ms.
Loans can only be g an ed o he cons uc ion and pu -
chase o new apa men s and de ached houses wi h e y
high ene gy e iciency. The MNB decided o pu chase
mo gage bonds quali ying o g een bond s a us; mo e-
o e , he MNB in oduced p e e en ial capi al equi e-
men s o g een co po a e and municipal inancing (MNB,
2021a).
Few cen al banks ha e aken clima e aspec s in o ac-
coun in hei mac op uden ial ins umen s. The ECB has
begun applying addi ional capi al equi emen s o banks
ha ail o e ec i ely manage clima e and en i onmen al
isks. I has also wa ned ha u he ac ion will be aken
i ins i u ions do no mee all o he supe iso y expec a-
ions wi hin he nex wo yea s (ECB, 2022). Since 2020,
MNB has se lowe capi al equi emen s o banks g an -
ing new eligible g een housing loans wi h an in e es a e
discoun (MNB, 2020).
Why do cen al banks eac di e en ly?
Di e ences in a i udes
Cen al banks disag ee abou whe he hey should ake
ac i e s eps agains clima e change. The ECB inds ha
cen al banks mus pa icipa e in he igh agains clima e
change because global ca bon p icing alone “will no
be su icien o ensu e a swi ansi ion o a ca bon- ee
economy” (Schnabel, 2021b).5 En i onmen al ex e nali ies
c ea e a ma ke ailu e ha is ansmi ed o inancial ma -
ke s, which disad an ages clima e- iendly in es men s
o wo easons (Schnabel, 2020). Fi s , he e is a lack o
a clea , consis en and anspa en global axonomy o
assess en i onmen al isks o inancial asse s. This hin-
de s in es men s in g een asse s and makes companies
eluc an o decla e in es men s as clima e- iendly in o -
de o a oid being suspec ed o g een washing. Secondly,
he e is no global p ice o CO2 emissions, causing inan-
cial ma ke s o o e s a e he e u ns on ca bon-in ensi e
asse s. Mo eo e , inancial ma ke s in he EU a e bank-
domina ed, and comme cial banks a e less e ec i e han
equi y ma ke s in inancing echnological inno a ion and
clima e- iendly echnologies (De Haas & Popow, 2023).
5 MNB (2021b) seems o sha e his iew.
In e economics 2024 | 4
240
Cen al Bank Policies
Due o such ma ke ailu es, he Eu osys em does no
wan o be a bys ande and uses i s ope a ional ame-
wo k o in luence c edi alloca ion owa ds clima e- iend-
ly p ojec s.
The CNB akes a di e en posi ion and a gues ha cen al
banks should con ine hemsel es o hei co e asks and
compe encies (Mo a, 2021; Rusnok, 2021).6 The ask o
mone a y policy is o main ain p ice s abili y and inancial
ma ke s abili y; mone a y policy is unsui able o co ec
ma ke ailu es o o sa e he clima e, o which o he pol-
icy a eas a e mo e sui able. Cen al banke s canno de-
cide whe he , e.g. bonds issued by a nuclea powe plan
a e g een o no . Cen al banks mus include he conse-
quences o clima e change in hei analyses, bu no use
hei ins umen s o ac i ely comba clima e change. I
hey do, clima e policy could become a ga eway o g ea -
e poli ical in luence on cen al banks.
Di e ences in capabili ies
The s uc u e o hei balance shee s a ec s he abili y o
cen al banks o conduc clima e-adjus ed mone a y policy.
Only ew cen al banks conduc hei mone a y policy ope -
a ions p edominan ly in domes ic asse s, ei he by lending
o he banking sec o o by buying (public o p i a e) secu i-
ies in open ma ke s. This applies o he Eu osys em and
he cen al banks o Sweden and ( o a much lesse ex en )
o Hunga y. Base money c ea ion in he emaining cen al
banks p edominan ly occu s h ough he pu chase o o -
eign asse s; and o eign ese es ha e adi ionally played a
p ominen ole in cen al bank balance shee s.
Because hese cen al banks do no conduc liquidi y-
c ea ing ende o open ma ke ope a ions wi h he com-
me cial banking sec o , hey a e unable o inco po a e cli-
ma e aspec s in o hei policy amewo k ia he “domes-
ic componen ” o mone a y base c ea ion. This does no
apply o o eign cu ency asse s accumula ed by deb o
cen al banks as a esul o in e en ions in he o eign
exchange ma ke , he composi ion o which may well be
based on clima e policy aspec s. Howe e , he obs acles
o a clima e policy o ien a ion o o eign asse s a e di e -
en om hose o a co esponding alignmen o domes ic
asse s (Fende e al., 2022).
A cen al bank’s abili y o align he composi ion o i s o -
eign ese es wi h clima e c i e ia depends on he pu -
pose ha in e na ional ese es se e. His o ically, o eign
ese es se ed o gua an ee ixed exchange a es and
signal o ma ke s ha a coun y’s in e na ional sol ency
6 Go e no s o HNB and BNR sha e his posi ion (Vujčić, 2021;
Isă escu, 2022).
was assu ed. On his basis, he accumula ion o o eign
ese es was guided by he impo a io o sho - e m
ex e nal deb , and “liquidi y” o “sa e y” we e impo an
c i e ia in deciding he composi ion o o eign ese es.
Meanwhile, many coun ies ha e mo ed o lexible ex-
change a es and hold mo e o eign ese es han neces-
sa y o signal in e na ional sol ency; o hese coun ies,
yield conside a ions play a g ea e ole han liquidi y and
isk exposu e in in es men selec ion (Fende e al., 2019).
Di e ences in ex e nal p essu es
E en hough cen al banks a e independen , hey s ill e-
spond o poli ical p essu e, mos ly om go e nmen s o
p i a e p essu e g oups. The “demand” o cen al bank
independence (CBI) has dec eased due o se e al ea-
sons (Binde , 2021). Low in la ion a es du ing he g ea
mode a ion ha e made adi ional a gumen s o CBI less
ele an . Cen al banks ha e gained poli ical powe du -
ing he inancial c isis, aising public conce ns abou le-
gi imacy and accoun abili y. As a esul , he e a e g owing
calls o cen al banks o se e socie al goals o he han
gua an eeing p ice s abili y, such as he desi e o become
ac i e in clima e policy.
Di e ences in policy p essu e may be ano he eason why
some cen al banks espond mo e lexibly han o he s
o calls o clima e- iendly policies. Al hough he e is a
lack o da a on poli ical p essu e on cen al banks om
clima e policy lobby ins i u ions, he e is indi ec e idence
ha i a ies ac oss he EU. One indica o is he numbe
o clima e s ikes o ganised by F idays o Fu u e be ween
Ma ch 2019 and No embe 2021 in EU membe s a es.7
These p o es s indica e ha clima e change is seen as a
p essing issue in some la ge eu o zone membe s a es
as well as in Denma k and Sweden; howe e , in he six
o he EU membe coun ies discussed he e, he poli ical
p essu e is conside ably lowe . This pic u e is mi o ed by
esul s o a su ey conduc ed among 26,600 EU ci izens
(Eu opean Commission, 2021).
Policy p e e ences a e ansmi ed o cen al bank deci-
sions in di e en ways. One channel is clima e change li i-
ga ion, which cla i ies whe he he Eu osys em akes en i-
onmen al aspec s su icien ly in o accoun and does no
iola e A icle 11 TFEU. Such a case was pending be o e a
Belgian cou in ea ly 2021 un il he plain i wi hd ew he
cha ge a e he ECB acknowledged i s legal obliga ions
o ake clima e in o accoun (Se ze e al., 2021; Clien
Ea h, 2022). Ano he channel is o med by he Eu opean
Pa liamen , whose membe s since 2017 ha e inc eased
7 See h ps:// idays o u u e.o g/wha -we-do/s ike-s a is ics/lis -o -
coun ies.
ZBW – Leibniz In o ma ion Cen e o Economics 241
Cen al Bank Policies
p essu es on he ECB ega ding i s ole in igh ing clima e
change (Massoc, 2022). Mo eo e , he e is e idence ha
he ECB eac s o public opinion and esponds o public
dissa is ac ion by expanding he scope o i s policy mes-
sage (Moschella e al., 2020; Dey is, 2023). Cen al bank-
e s ha e a “home bias” and hei posi ion- aking is also
shaped by domes ic poli ical conside a ions and by he
ideological inclina ions o hei go e nmen s (Bennani &
Neuenki ch, 2017; Moschella & Dioda i, 2020).
Conclusion
EU cen al banks can be di ided in o h ee g oups: one
ha akes clima e change in o accoun ela i ely s ongly
(Eu osys em, MNB), a g oup ha ac s cau iously (DNB,
SRB) and a g oup (BNB, BNR, CNB, HNB, NBP), ha has
been less ac i e in clima e policy. The di e gences canno
be a ibu ed o di e en manda es, bu a e based on di -
e en assessmen s o he ole o cen al banks as clima e
p o ec o s, di e en capaci ies o ake clima e change
in o accoun and di e en ex e nal p essu es.
The epo ed di e gences sugges ha he willingness, a
leas in he Czech Republic and Poland, o join he eu o a ea
in he nea u u e will con inue o decline. Nei he coun y in-
ends o join he Exchange Ra e Mechanism in he o esee-
able u u e. Wi h he ECB cu en ly aking a cau ious cou se
owa ds s onge compliance wi h clima e a ge s, in e nal
ese a ions abou joining he eu ozone a e likely o inc ease
u he .
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