Funding an ecological transition in Europe via green money bonds would be economically justifiable. socialeurope.eu
To what extent can the money created by the central bank be used to finance investments in the environment? This is a question often asked today. The green activists respond with enthusiasm that the central bank—and, in particular, the European Central Bank (ECB)—should stimulate the financing of environmental investments through the printing of money.
The ECB has created €2,600 billion of new money since 2015 in the context of its quantitative easing (QE) programme. All that money has gone to financial institutions which have done very little with it. Why can’t the ECB inject the money into environmental investments instead of pouring it into the financial sector?
Most traditional economists react with horror. The ECB should not interfere with the environment, they say. The government should do that. If the ECB jumps on the environmental bandwagon, it will be obliged to print too much money. This will fuel inflation in the long run, with terrible consequences. Ultimately, the environment will not be served.