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Use ECB’s money-creation capacity to support environmental projects

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Use ECB’s money-creation capacity to support environmental projects There is no limit to the amount of financial assets the ECB can buy. In principle, it could purchase all existing financial assets (all bonds and shares, for example) … There is also no restriction on what types of assets the ECB can buy … It could replace the old bonds with new ‘environmental bonds’, issued to finance environmental projects. The bottom line is that it is perfectly possible for the ECB to use the instrument of money creation to favour environmental investments without endangering price stability … Given the existential threat of the degradation of the environment, including climate change, the priority should be to use the ECB’s money-creation capacity towards the

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Use ECB’s money-creation capacity to support environmental projects

There is no limit to the amount of financial assets the ECB can buy. In principle, it could purchase all existing financial assets (all bonds and shares, for example) … There is also no restriction on what types of assets the ECB can buy … It could replace the old bonds with new ‘environmental bonds’, issued to finance environmental projects.

Use ECB’s money-creation capacity to support environmental projectsThe bottom line is that it is perfectly possible for the ECB to use the instrument of money creation to favour environmental investments without endangering price stability …

Given the existential threat of the degradation of the environment, including climate change, the priority should be to use the ECB’s money-creation capacity towards the support of environmental projects. This can be done without creating inflation.

Paul De Grauwe

So now we are eagerly awaiting the Krugman-Summers-Rogoffs denouncing this proposal as “dangerously wrong.” In the scientific world,​ it doesn’t matter who says​ what. So, if MMTers propose central banks to buy ‘green bonds’ that must be evaluated the same way as when a renowned mainstream professor at the LSE’s European Institute says so. Or …?

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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