Greening monetary policy

While there is increasing interest in decarbonizing or greening monetary policy, central banks are keen to maintain market neutrality. However, evidence that the has a bias towards carbon-intensive companies. The paper develops method tilt European Central Bank’s (ECB) asset and collateral framework low-carbon assets. We find medium tilting approach reduces carbon emissions ECB’s corporate bank bond portfolio by over 50%. show low allocation can be done without undue interference with transmission mechanism of policy.Key policy insights for operations overweight high companies.A companies 55% ECB's portfolio.It also cost capital This an incentive reform adopt technologies.