The role of central banks in financing the transition to the green economy

Abstract EN

Environmental projects are an important input to economic growth because they play an important role in ensuring the sustainability of economic development.

Thus, today's trend among the world's developed and developing countries is to improve the green investment climate and to encourage environmental investment projects.

As funding is the nerve and lifeline of the economy, so every project needs to be active in this important element, which has emerged as one of the most important issues of concern to governments as well as entrepreneurs and institutions.

The international financial institutions have added a new prerequisite for projects to finance them: Its environment and its work with clean technologies and its production of friendly and / or environmentally friendly products.

Therefore, the central banks and financial institutions in all countries of the world have to provide a mechanism or tools that encourage the financing of the green economy.

So this research discusses the role of the central banks in financing the green economy.

Given the huge investments needed to achieve a transition to a green economy, the financial sector will have to play a key role in allocation of resources for green economy - and halting environmentally damaging financing activities.

In light of this, the research examines the impact of environmental factors on the traditional objectives of the Central Bank and provides a theoretical analysis of the situations faced by and against central banks to meet environmental challenges and sustainability.

In addition, it discusses the potential role of macro-prudential fiscal instruments and measures: modifying the incentives and constraints faced by banks in defining their lending strategy could expand the scope of credit creation for low-carbon sectors.

It also examines the role of sustainable development of central banks, and the need to divide labor between central banks and other institutions so that the transition can turn into the green economy.