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February 14, 2023

ECB study shows short-term benefits of green QE

The European Central Bank has published a report examining the impact of so-called green quantitative easing on carbon emissions reductions and found that, in the short-term, this is an effective tool to speed up the green transition.

Researchers set up a model studying the interactions between green QE and the introduction of a carbon tax that would gradually increase over time. It also spells out the remit of the exercise, which ignores “any legal considerations regarding the central bank’s mandate or price stability considerations”. It does add, however, that the ECB’s mandate “clearly establishes that this monetary policy measure should not prejudice or conflict with the primary objective of price stability”.

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