Monetary Policy and Climate Change – Distinguishing Between a Protective and a Proactive Agenda


Central banks in many economies are striving to take account of climate change in their policies and operations. In this context, the important distinction between a protective agenda under which central banks take climate considerations into account in pursuing their core mandate and protecting their balance sheet against climate-related financial risks, versus a proactive agenda under which they pursue climate objectives as an additional goal is often blurred. This paper dissects the differences and calls on central banks to take action under a protective agenda, while treading carefully, if at all, into proactive territory.