Den Europæiske Centralbanks adressering af klimaforandringerne: Et teoritestende casestudie af Den Europæiske Centralbanks monetære og tilsynsførende muligheder for at implementere klimatiltag, og hvorvidt de er legitime

Patwary, Martin

4. semester

Politik og Administration, Kandidat

2021

2021-09-29

46 pages

Climate change is a phenomenon which impacts on the political agenda has been evolving increasingly. The climate visual impacts in the world from melting ice to burning forests and a growing demand for action from the population has emphasized how challenging of an issue climate change is to address. Institutions with significance of the society have to relate on how to handle climate change, and in which scale within their mandate. Central Banks and in this project limited to The European Central Bank are an interesting case to investigate, in common of how they can act from a monetary and supervisory perspective. One of the main questions the project want’s to address are which arguments that can justify that it’s the European Central Bank affair to organize measures on the climate field. The projects research design is structured by a theory testing approach with includes relevant climate initiatives for Central Banks and output legitimacy. One of the essential parts of the investigation is to evaluate the output legitimacy of measures related to climate change. The investigation includes five qualitative data sources from central actors within the European Central Banks Governing Council. The projects main thesis to address is formulated as follows: Which monetary and supervisory measures can the European Central Bank implement with the purpose on acting on climate change, and which legitimate arguments can justify that it’s the Central Bank’s affair to include them in its policy? The investigation concludes that the European Central Bank can implement four general approaches to address climate change. This relates to a monetary prioritization to innovation and supervisory measures involving stress tests models of climate related risks, appointment of collateral criteria related to credit ratings and a review of the Central Banks balance sheet of assets. The main argument that justifies the European Central Bank involvement to organize concrete measures are that climate related risks are a threat to the Central Banks management of its primary objective connected to price stability. The investigation clarify that climate related risks can create short term volatility that can impact the financial system in a negative direction in common of growth and inflation level. The project finds a positive correlation of output legitimacy compared to the European Central Banks plan of measures for addressing climate change in its Strategy Review agreed in 2021.

Climate change, output legitimacy ; Central Bank ; European Central Bank

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