{"id":17419,"date":"2024-11-29T11:49:31","date_gmt":"2024-11-29T10:49:31","guid":{"rendered":"https:\/\/www.uni.lu\/fdef-en\/?post_type=news&#038;p=17419"},"modified":"2024-11-29T11:49:32","modified_gmt":"2024-11-29T10:49:32","slug":"the-role-of-central-banks-and-international-financial-institutions-in-the-transition-towards-a-low-carbon-economy","status":"publish","type":"news","link":"https:\/\/www.uni.lu\/fdef-en\/news\/the-role-of-central-banks-and-international-financial-institutions-in-the-transition-towards-a-low-carbon-economy\/","title":{"rendered":"\u202dThe Role of Central Banks and International Financial Institutions in the\u202c\u202d Transition Towards a Low-Carbon Economy\u202c\u202d"},"content":{"rendered":"\n<section class=\"wp-block-unilux-blocks-free-section section\"><div class=\"container xl:max-w-screen-xl\">\n<p>On\u202c\u202d 21-22 November\u202c\u202d 2024,\u202c\u202d the\u202c\u202d <a href=\"https:\/\/www.esm.europa.eu\/\">European\u202c\u202d Stability\u202c\u202d Mechanism<\/a>\u202c\u202d (ESM),\u202c\u202d the\u202c\u202d <a href=\"https:\/\/www.uni.lu\/en\/\">University\u202c\u202d of\u202c Luxembourg<\/a>\u202c\u202d and\u202c\u202d the\u202c\u202d <a href=\"https:\/\/www.bcl.lu\/fr\/index.html\">Banque\u202c\u202d centrale\u202c\u202d du\u202c\u202d Luxembourg<\/a>\u202c\u202d hosted\u202c\u202d CEBRA\u2019s\u202c\u202d International\u202c\u202d Finance\u202c and\u202c\u202d Macroeconomics\u202c\u202d program\u202c\u202d (IFM)\u202c\u202d annual\u202c\u202d program\u202c\u202d meeting.\u202c\u202d The\u202c\u202d conference\u202c\u202d was\u202c\u202d organized\u202c by\u202c\u202d Galina\u202c\u202d Hale\u202c\u202d (UC\u202c\u202d Santa\u202c\u202d Cruz),\u202c\u202d <a href=\"https:\/\/www.uni.lu\/fdef-en\/people\/michael-halling\/\">Michael\u202c\u202d Halling<\/a>\u202c\u202d (University\u202c\u202d of\u202c\u202d Luxembourg),\u202c\u202d <a href=\"https:\/\/www.uni.lu\/fdef-en\/people\/francois-koulischer\/\">Fran\u00e7ois\u202c Koulischer<\/a> (University of Luxembourg), Yasin Mimir (ESM) and Lorenzo Ricci (ESM).\u202c<\/p>\n\n\n<figure class=\"wp-block-dev4-reusable-blocks-image  object-fit--cover\">\n    \n<img decoding=\"async\" class=\"wp-block-image unilux-custom-image-block\"\n                alt=\"CEBRA\"\n            src=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-scaled.jpg\"\n                srcset=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-300x200.jpg 300w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-1024x683.jpg 1024w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-768x512.jpg 768w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-1536x1024.jpg 1536w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2393-copy-2048x1366.jpg 2048w\"\n                style=\"object-position: 50.00% 56.00%; font-family: &quot;object-fit: cover; object-position: 50.00% 56.00%;&quot;; aspect-ratio: 16\/9; object-fit: cover; width: 100%;\"\n        loading=\"lazy\"\n\/>    <\/figure>\n\n\n<p>The\u202c\u202d meeting\u202c\u202d was\u202c\u202d kicked\u202c\u202d off\u202c\u202d by\u202c\u202d <strong>Rolf\u202c\u202d Strauch<\/strong>\u202c\u202d,\u202c\u202d Chief\u202c\u202d Economist\u202c\u202d and\u202c\u202d Member\u202c\u202d of\u202c\u202d the\u202c\u202d Management\u202c Board,\u202c\u202d ESM,\u202c\u202d who\u202c\u202d spoke\u202c\u202d about\u202c\u202d the\u202c\u202d current\u202c\u202d issues\u202c\u202d in\u202c\u202d the\u202c\u202d green\u202c\u202d transition\u202c\u202d of\u202c\u202d financial\u202c\u202d institutions.\u202c His\u202c\u202d talk\u202c\u202d was\u202c\u202d followed\u202c\u202d by\u202c\u202d the\u202c\u202d keynote\u202c\u202d address\u202c\u202d by\u202c\u202d <strong>Claudia\u202c\u202d Buch<\/strong>\u202c\u202d,\u202c\u202d Chair\u202c\u202d of\u202c\u202d the\u202c\u202d Supervisory\u202c\u202d Board\u202c at\u202c\u202d the\u202c\u202d ECB,\u202c\u202d who\u202c\u202d talked\u202c\u202d about\u202c\u202d central\u202c\u202d banks\u202c\u202d being\u202c\u202d policy-takers\u202c\u202d when\u202c\u202d it\u202c\u202d comes\u202c\u202d to\u202c\u202d climate\u202c\u202d and\u202c the effects of non-central bank climate policies that are relevant to central banks.\u202c<br>\u202d<\/p>\n\n\n<figure class=\"wp-block-dev4-reusable-blocks-image  object-fit--cover\">\n    \n<img decoding=\"async\" class=\"wp-block-image unilux-custom-image-block\"\n                alt=\"CEBRA\"\n            src=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-scaled.jpg\"\n                srcset=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-300x200.jpg 300w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-1024x683.jpg 1024w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-768x512.jpg 768w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-1536x1024.jpg 1536w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2452-copy-2048x1366.jpg 2048w\"\n                style=\"object-position: 58.00% 76.00%; font-family: &quot;object-fit: cover; object-position: 58.00% 76.00%;&quot;; aspect-ratio: 16\/9; object-fit: cover; width: 100%;\"\n        loading=\"lazy\"\n\/>    <\/figure>\n\n\n<p><strong>Matthias\u202c\u202d Kaldorf\u202c\u202d<\/strong> from\u202c\u202d the\u202c\u202d Bundesbank\u202c\u202d demonstrated\u202c\u202d in\u202c\u202d his\u202c\u202d talk\u202c\u202d short-run\u202c\u202d financial\u202c\u202d stability\u202c risks\u202c\u202d from\u202c\u202d climate\u202c\u202d policies\u202c\u202d but\u202c\u202d showed\u202c\u202d that,\u202c\u202d for\u202c\u202d a\u202c\u202d patient\u202c\u202d policymaker,\u202c\u202d transition\u202c\u202d risks\u202c\u202d are\u202c\u202d more\u202c than\u202c\u202d compensated\u202c\u202d by\u202c\u202d long-run\u202c\u202d improvements\u202c\u202d in\u202c\u202d financial\u202c\u202d stability.\u202c\u202d Matthias&#8217;s\u202c\u202d theory\u202c\u202d prediction\u202c seems\u202c\u202d to\u202c\u202d be\u202c\u202d consistent\u202c\u202d with\u202c\u202d the\u202c\u202d data,\u202c\u202d as\u202c\u202d <strong>Tristan\u202c\u202d Jourde<\/strong>\u202c\u202d,\u202c\u202d Banque\u202c\u202d de\u202c\u202d France,\u202c\u202d showed\u202c\u202d empirical\u202c evidence\u202c\u202d that\u202c\u202d transition\u202c\u202d risk\u202c\u202d exposures\u202c\u202d are\u202c\u202d positively\u202c\u202d associated\u202c\u202d with\u202c\u202d systemic\u202c\u202d risks.\u202c Specifically\u202c\u202d for\u202c\u202d the\u202c\u202d EU,\u202c\u202d <strong>Ghassane\u202c\u202d Benmir\u202c\u202d<\/strong>,\u202c\u202d IE\u202c\u202d Business\u202c\u202d School,\u202c\u202d illustrated\u202c\u202d the\u202c\u202d welfare\u202c\u202d costs\u202c\u202d of\u202c the\u202c\u202d high\u202c\u202d volatility\u202c\u202d of\u202c\u202d ETS\u202c\u202d carbon\u202c\u202d prices\u202c\u202d and\u202c\u202d proposed\u202c\u202d a\u202c\u202d way\u202c\u202d for\u202c\u202d the\u202c\u202d prices\u202c\u202d to\u202c\u202d be\u202c\u202d stabilized\u202c around a target value, such as the social cost of carbon, by changing permit supply.\u202c<\/p>\n\n\n\n<p>Turning\u202c\u202d to\u202c\u202d central\u202c\u202d banks,\u202c\u202d <strong>Jos\u00e9\u202c\u202d Nicol\u00e1s\u202c\u202d Rosas<\/strong>\u202c\u202d,\u202c\u202d Pompeu\u202c\u202d Fabra,\u202c\u202d explored\u202c\u202d whether\u202c\u202d non-climate\u202c policies\u202c\u202d affect\u202c\u202d emissions.\u202c\u202d Jos\u00e9\u202c\u202d demonstrated\u202c\u202d that\u202c\u202d when\u202c\u202d monetary\u202c\u202d policy\u202c\u202d tightening\u202c\u202d reduces\u202c economic\u202c\u202d activity,\u202c\u202d emissions\u202c\u202d actually\u202c\u202d go\u202c\u202d up.\u202c\u202d This\u202c\u202d counterintuitive\u202c\u202d effect\u202c\u202d can\u202c\u202d be\u202c\u202d explained\u202c through\u202c\u202d differential\u202c\u202d responses\u202c\u202d in\u202c\u202d energy\u202c\u202d prices,\u202c\u202d where\u202c\u202d the\u202c\u202d relative\u202c\u202d cost\u202c\u202d of\u202c\u202d carbonated\u202c\u202d energy\u202c falls more in response to the shock.\u202c<br>\u202d<\/p>\n\n\n<figure class=\"wp-block-dev4-reusable-blocks-image  object-fit--cover\">\n    \n<img decoding=\"async\" class=\"wp-block-image unilux-custom-image-block\"\n                alt=\"CEBRA\"\n            src=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-scaled.jpg\"\n                srcset=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-300x200.jpg 300w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-1024x683.jpg 1024w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-768x512.jpg 768w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-1536x1024.jpg 1536w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2471-copy-2048x1366.jpg 2048w\"\n                style=\"object-position: 63.00% 65.00%; font-family: &quot;object-fit: cover; object-position: 63.00% 65.00%;&quot;; aspect-ratio: 16\/9; object-fit: cover; width: 100%;\"\n        loading=\"lazy\"\n\/>    <\/figure>\n\n\n<p>Central\u202c\u202d banks,\u202c\u202d however,\u202c\u202d do\u202c\u202d have\u202c\u202d a\u202c\u202d way\u202c\u202d to\u202c\u202d influence\u202c\u202d financial\u202c\u202d flows,\u202c\u202d which\u202c\u202d are\u202c\u202d crucial\u202c\u202d to\u202c\u202d the\u202c green\u202c\u202d transition.\u202c\u202d While,\u202c\u202d as\u202c\u202d Claudia\u202c\u202d said,\u202c\u202d this\u202c\u202d is\u202c\u202d not\u202c\u202d a\u202c\u202d substitute\u202c\u202d for\u202c\u202d climate\u202c\u202d policies,\u202c\u202d catalyzing\u202c private\u202c\u202d financing\u202c\u202d of\u202c\u202d green\u202c\u202d technologies\u202c\u202d is\u202c\u202d a\u202c\u202d necessary\u202c\u202d condition\u202c\u202d for\u202c\u202d a\u202c\u202d successful\u202c\u202d transition.\u202c\u202d As <strong>Sophia\u202c\u202d Chiyoung\u202c\u202d Cheong<\/strong>\u202c\u202d,\u202c\u202d ESSCA\u202c\u202d School\u202c\u202d of\u202c\u202d Management,\u202c\u202d and\u202c\u202d coauthors\u202c\u202d demonstrated,\u202c current\u202c\u202d private\u202c\u202d financial\u202c\u202d flows\u202c\u202d to\u202c\u202d emerging\u202c\u202d economies\u202c\u202d are\u202c\u202d actually\u202c\u202d counterproductive\u202c\u202d in\u202c\u202d terms\u202c\u202d of\u202c the\u202c\u202d green\u202c\u202d transition.\u202c\u202d What\u202c\u202d policies\u202c\u202d will\u202c\u202d actually\u202c\u202d help\u202c\u202d tilt\u202c\u202d return\u202c\u202d on\u202c\u202d investment\u202c\u202d measures\u202c\u202d in\u202c\u202d favour\u202c of\u202c\u202d green\u202c\u202d projects\u202c\u202d is\u202c\u202d a\u202c\u202d very\u202c\u202d complex\u202c\u202d question.\u202c\u202d <strong>Annamaria\u202c\u202d de\u202c\u202d Crescenzio<\/strong>\u202c\u202d,\u202c\u202d OECD,\u202c\u202d gave\u202c\u202d us\u202c some\u202c\u202d answers\u202c\u202d by\u202c\u202d presenting\u202c\u202d novel\u202c\u202d information\u202c\u202d on\u202c\u202d the landscape\u202c\u202d of\u202c\u202d actual\u202c\u202d green\u202c\u202d investment,\u202c\u202d a\u202c much-needed improvement over self-reported metrics.\u202c<br>\u202d<\/p>\n\n\n\n<p>One\u202c\u202d of\u202c\u202d the\u202c\u202d tools\u202c\u202d in\u202c\u202d the\u202c\u202d central\u202c\u202d bank\u202c\u202d toolbox\u202c\u202d is\u202c\u202d climate\u202c\u202d stress\u202c\u202d testing.\u202c\u202d <strong>Trang\u202c\u202d Nguyen<\/strong>\u202c\u202d,\u202c\u202d University\u202c of\u202c\u202d Bristol,\u202c\u202d showed\u202c\u202d that\u202c\u202d information\u202c\u202d quality\u202c\u202d improvement\u202c\u202d actually\u202c\u202d increases\u202c\u202d lending\u202c\u202d to\u202c\u202d brown\u202c firms,\u202c\u202d but\u202c\u202d growth\u202c\u202d rates\u202c\u202d of\u202c\u202d lending\u202c\u202d to\u202c\u202d green\u202c\u202d projects\u202c\u202d are\u202c\u202d even\u202c\u202d higher.\u202c\u202d Thus,\u202c\u202d increasing\u202c\u202d information\u202c quality\u202c\u202d about\u202c\u202d exposures\u202c\u202d to\u202c\u202d transition\u202c\u202d risks\u202c\u202d is\u202c\u202d an\u202c\u202d important\u202c\u202d part\u202c\u202d of\u202c\u202d directing\u202c\u202d funds\u202c\u202d to\u202c\u202d green\u202c transition.\u202c\u202d <strong>Laura\u202c\u202d \u00c1lvarez\u202c\u202d Rom\u00e1n\u202c\u202d<\/strong>,\u202c\u202d Banco\u202c\u202d de\u202c\u202d Espana,\u202c\u202d demonstrated\u202c\u202d that\u202c\u202d information\u202c\u202d is\u202c\u202d also\u202c crucial\u202c\u202d for\u202c\u202d managing\u202c\u202d physical\u202c\u202d risks:\u202c\u202d in\u202c\u202d the\u202c\u202d aftermath\u202c\u202d of\u202c\u202d climate\u202c\u202d disasters\u202c\u202d local\u202c\u202d banks\u202c\u202d are\u202c\u202d able\u202c\u202d to\u202c maintain\u202c\u202d their\u202c\u202d lending\u202c\u202d to\u202c\u202d affected\u202c\u202d firms\u202c\u202d without\u202c\u202d compromising\u202c\u202d their\u202c\u202d risk\u202c\u202d profile\u202c\u202d by\u202c\u202d relying\u202c\u202d on\u202c\u202d soft\u202c information.\u202c\u202d Expanding\u202c\u202d climate\u202c\u202d stress\u202c\u202d testing\u202c\u202d can\u202c\u202d improve\u202c\u202d the\u202c\u202d quality\u202c\u202d of\u202c\u202d information\u202c\u202d on\u202c\u202d both\u202c transition and physical risks.\u202c<br>\u202d<\/p>\n\n\n\n<p>In\u202c\u202d her\u202c\u202d keynote\u202c\u202d address,\u202c\u202d <strong>Agn\u00e8s\u202c\u202d B\u00e9nassy-Qu\u00e9r\u00e9<\/strong>\u202c\u202d,\u202c\u202d deputy\u202c\u202d governor\u202c\u202d of\u202c\u202d the\u202c\u202d Banque\u202c\u202d de\u202c\u202d France,\u202c provided\u202c\u202d an\u202c\u202d insightful\u202c\u202d overview\u202c\u202d of\u202c\u202d the\u202c\u202d work\u202c\u202d of\u202c\u202d the\u202c\u202d Network\u202c\u202d for\u202c\u202d Greening\u202c\u202d the\u202c\u202d Financial\u202c\u202d System,\u202c including\u202c\u202d recent\u202c\u202d updates\u202c\u202d of\u202c\u202d their\u202c\u202d climate\u202c\u202d scenarios\u202c\u202d and\u202c\u202d their\u202c\u202d implications\u202c\u202d for\u202c\u202d monetary\u202c\u202d policy.\u202c Agn\u00e8s\u202c\u202d also\u202c\u202d highlighted\u202c\u202d the\u202c\u202d potential\u202c\u202d risks\u202c\u202d to\u202c\u202d financial\u202c\u202d stability\u202c\u202d and\u202c\u202d the\u202c\u202d important,\u202c\u202d and\u202c under-studied, role of insurance in protecting against climate risks.\u202c <strong>Galina\u202c\u202d Hale<\/strong>\u202c\u202d,\u202c\u202d University\u202c\u202d of\u202c\u202d California\u202c\u202d Santa\u202c\u202d Cruz,\u202c\u202d finally\u202c\u202d concluded\u202c\u202d the\u202c\u202d conference\u202c\u202d with\u202c\u202d a\u202c summary of the main themes and policy debates going forward.\u202c<\/p>\n\n\n<figure class=\"wp-block-dev4-reusable-blocks-image  object-fit--cover\">\n    \n<img decoding=\"async\" class=\"wp-block-image unilux-custom-image-block\"\n                alt=\"CEBRA conference\"\n            src=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-scaled.jpg\"\n                srcset=\"https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-300x200.jpg 300w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-1024x683.jpg 1024w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-768x512.jpg 768w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-1536x1024.jpg 1536w, https:\/\/www.uni.lu\/wp-content\/uploads\/sites\/3\/2024\/11\/T0A2671-copy-2048x1366.jpg 2048w\"\n                style=\"object-position: 47.00% 94.00%; font-family: &quot;object-fit: cover; object-position: 47.00% 94.00%;&quot;; aspect-ratio: 16\/9; object-fit: cover; width: 100%;\"\n        loading=\"lazy\"\n\/>    <\/figure>\n\n\n<p>*****<\/p>\n\n\n\n<p><sup>All images \u00a9Olivier Dessy<\/sup><\/p>\n<\/div><\/section>\n","protected":false},"excerpt":{"rendered":"<p>On\u202c\u202d 21-22 November\u202c\u202d 2024,\u202c\u202d the\u202c\u202d European\u202c\u202d Stability\u202c\u202d Mechanism\u202c\u202d (ESM),\u202c\u202d the\u202c\u202d University\u202c\u202d of\u202c Luxembourg\u202c\u202d and\u202c\u202d the\u202c\u202d Banque\u202c\u202d centrale\u202c\u202d du\u202c\u202d Luxembourg\u202c\u202d hosted\u202c\u202d CEBRA\u2019s\u202c\u202d International\u202c\u202d Finance\u202c and\u202c\u202d Macroeconomics\u202c\u202d program\u202c\u202d (IFM)\u202c\u202d annual\u202c\u202d program\u202c\u202d meeting.\u202c\u202d The\u202c\u202d conference\u202c\u202d was\u202c\u202d organized\u202c by\u202c\u202d Galina\u202c\u202d Hale\u202c\u202d (UC\u202c\u202d Santa\u202c\u202d Cruz),\u202c\u202d Michael\u202c\u202d Halling\u202c\u202d (University\u202c\u202d of\u202c\u202d Luxembourg),\u202c\u202d Fran\u00e7ois\u202c Koulischer (University of Luxembourg), Yasin Mimir (ESM) and Lorenzo Ricci 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