The future of green central banking and regulation

Central banks are responsible for achieving price stability and financial stability. With a consensus that climate risks are part of financial risks, central banks increasingly focus on prudential policy and conduct climate analysis. Meanwhile, green monetary policy has been adopted only by a few central banks and to a limited scale since it is not clear how climate risks can be incorporated into monetary policy frameworks. Central banks emphasize that governments are primarily responsible for implementing climate policies. With more accelerated climate policies and alignments of taxonomies, central banks may be in a better position to take green monetary policy. Central banks can start by promoting more financial institutions to improve their risk management strategies.