Historically, central banking theory was built on the principle of . The idea was that central banks should not pick "winners and losers" when conducting open-market operations or setting collateral frameworks.
In practice, "Green Central Banking" manifests through several operational changes: Central Banking: Theory and Practice in Sustain...
As we move forward, the "practice" of central banking will likely see a more integrated approach where environmental data is treated with the same rigor as GDP or inflation figures. Historically, central banking theory was built on the
The traditional mandate of a central bank—maintaining price stability and, in some cases, supporting full employment—is undergoing its most significant evolution since the shift to inflation targeting in the 1990s. As the global economy faces the systemic threats of climate change and environmental degradation, the theory and practice of central banking are being redefined to incorporate . 1. The Theoretical Shift: From "Neutrality" to "Prudence" The Theoretical Shift: From "Neutrality" to "Prudence" The
The frontier of sustainable central banking is moving toward . While carbon has been the focus, there is growing realization that the loss of biodiversity and ecosystem services (like pollination or clean water) poses a similar systemic risk to the global food supply and pharmaceutical industries.
Central Banking: Theory and Practice in the Era of Sustainability