The Asymmetric Effects of Weather Shocks on Euro Area Inflation
Weather shocks have asymmetric and non-linear impacts on inflation in the eurozone that introduce significant price volatility, according to research from the European Central Bank.
How Green is Our Balance Sheet?
The ECB says climate disclosures show that its investment strategy is “bearing fruit” on decarbonisation, but that ambitious action is needed as monetary policy tightening reduces its opportunities to tilt its portfolio.
Results of the 2022 Climate Risk Stress Test of the Eurosystem Balance Sheet
The European Central Bank’s 2022 stress test finds that the Eurosystem’s balance sheet is materially exposed to climate risks and that the corporate bond portfolio is the primary source of exposure.
Toward a Green Economy
In this paper published by the European Central Bank, economists analyse the efficacy of green quantitative easing and find that it would be most effective for reducing emissions if used aggressively and immediately.
The Effects of Climate Change on the Natural Rate of Interest
This working paper by the ECB says climate change may reduce natural interest, creating serious issues for monetary policymaking. The authors say an orderly transition would mitigate this, and central banks should address carbon biases to meet mandates.
The Impact of Climate Change on Price Stability
Informed by central bankers, this literature review of climate change and inflation studies finds that climatic effects on prices already exist and that climate issues should be incorporated into monetary policy.
A Safer Transition for Fossil Banking
This report quantifies the additional capital needed to reflect the financial stability risk associated with banks’ fossil fuel exposures.
The ECB Paris Gap: Substantive but Treatable
This report proposes that the European Central Bank align with its primary and environmental mandates by adopting climate neutrality principles and increasing the scope and urgency of its decarbonisation plans.
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