{"id":12264,"date":"2024-10-02T10:12:11","date_gmt":"2024-10-02T08:12:11","guid":{"rendered":"https:\/\/stanislasjourdan.fr\/?p=12264"},"modified":"2024-10-03T10:26:26","modified_gmt":"2024-10-03T08:26:26","slug":"report-a-green-interest-rate-for-the-eurozone","status":"publish","type":"post","link":"https:\/\/stanislasjourdan.fr\/en\/2024\/10\/02\/report-a-green-interest-rate-for-the-eurozone\/","title":{"rendered":"REPORT: A Green Interest Rate for the Eurozone"},"content":{"rendered":"\n<p><strong>In a new Policy Paper co-written with colleagues at <a href=\"https:\/\/sustainablefinancelab.nl\/en\/new-sfl-policy-paper-proposes-a-green-interest-rate-to-accelerate-europes-green-transition-and-stabilise-inflation\/\">Sustainable Finance Lab<\/a>, we presents a proposal to advance Europe\u2019s green transition: the introduction of a green interest rate by the European Central Bank (ECB). The proposal outlines how targeted monetary policy can play a crucial role in combating climate change, promoting sustainable investment, and supporting the ECB\u2019s mandate of low and stable inflation.<\/strong><\/p>\n\n\n\n<p>Key points of the report:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High interest rates slowing the green transition<\/strong>: Current monetary policy disproportionately affects renewable energy projects, which rely heavily on upfront investment. A green interest rate would eliminate this disadvantage and channel financing towards green projects.<\/li>\n\n\n\n<li><strong>Tackling inflation by reducing dependency on fossil fuels<\/strong>: Europe\u2019s reliance on oil and gas is a major driver of inflation. By encouraging investments in clean energy, the green interest rate could mitigate inflationary pressures caused by volatile fossil fuel prices, helping the ECB fulfill its price stability mandate.<\/li>\n\n\n\n<li>A significant challenge to implementing a green interest rate has been the definition of \u201cgreen assets.\u201d This paper proposes using the EU Taxonomy\u2014a robust, politically legitimate EU framework for identifying sustainable activities\u2014to guide the ECB in its green interest rate program.<\/li>\n\n\n\n<li><strong>Recent&nbsp;progress on the implementation of the EU Taxonomy and related disclosure by banks significantly increase the political and practical feasibility of a green TLTRO.<\/strong>&nbsp;We analyse the various design choices that are available for policymakers to ensure a green rate would stimulate green lending, while being operationally&nbsp;feasible&nbsp;and not jeopardise the conduct of monetary policy.&nbsp;<\/li>\n\n\n\n<li>Based on the analysis of the Taxonomy alignment of 73 banks&nbsp;representing&nbsp;80% of Eurozone banking assets, we further estimate that a green TLTRO could reach an annual size of between \u20ac317-378 billion. This order of magnitude is broadly in line with estimations of the green investment gap in Europe and falls within the possible envelope of the ECB\u2019s future operational framework and liquidity management.&nbsp;<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-text-color has-link-color has-text-align-center wp-element-button\" href=\"https:\/\/sustainablefinancelab.nl\/wp-content\/uploads\/sites\/334\/2024\/09\/A-green-interest-rate-for-Europe.pdf\">Download the paper<\/a><\/div>\n<\/div>\n\n\n\n<p>To cite this paper: <\/p>\n\n\n\n<pre class=\"wp-block-code\"><code>Jourdan, S., Van Tilburg, R., Kramer, B., Simi\u0107, A. and Bronstering, G. (2024) <em>A green interest rate for the Eurozone: evaluating the design choices<\/em>. Sustainable Finance Lab. Available at: <a href=\"https:\/\/sustainablefinancelab.nl\/wp-content\/uploads\/sites\/334\/2024\/09\/A-green-interest-rate-for-Europe.pdf\">https:\/\/sustainablefinancelab.nl\/wp-content\/uploads\/sites\/334\/2024\/09\/A-green-interest-rate-for-Europe.pdf<\/a>.<\/code><\/pre>\n","protected":false},"excerpt":{"rendered":"<p>In a new Policy Paper co-written with colleagues at Sustainable Finance Lab, we presents a proposal to advance Europe\u2019s green transition: the introduction of a green interest rate by the European Central Bank (ECB). The proposal outlines how targeted monetary policy can play a crucial role in combating climate change, promoting sustainable investment, and supporting the ECB\u2019s mandate of low<\/p>\n","protected":false},"author":1,"featured_media":12268,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[100,416,99],"tags":[410,340,458,459],"class_list":["post-12264","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-a-la-une","category-eurozone-ecb","category-featured","tag-climate-change","tag-ecb","tag-green-monetary-policy","tag-green-tltros"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/stanislasjourdan.fr\/wp-content\/uploads\/2024\/10\/A-green-interest-rate-for-Europe.png","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2om4O-3bO","_links":{"self":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/12264","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/comments?post=12264"}],"version-history":[{"count":5,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/12264\/revisions"}],"predecessor-version":[{"id":12271,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/12264\/revisions\/12271"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/media\/12268"}],"wp:attachment":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/media?parent=12264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/categories?post=12264"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/tags?post=12264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}