There is increasing pressure on central banks to take climate change into account in formulating monetary policy. The Bank of England and the European Central Bank have already done so, and the Fed may follow suit. Indeed, the Fed’s move into credit allocation and fiscal policy, as a result of the 2008 financial crisis and the COVID-19 pandemic, has set a precedent for mission creep.
One of those calling for action is Megan Greene, a senior fellow at the Harvard Kennedy School of Government and a columnist for the Financial Times. This article will consider her case for the active use of monetary policy to support a green agenda.
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