Realising Central Banks’ Climate Ambitions Through Financial Stability Mandates

Abstract This paper discusses how financial stability governance has evolved and central banks regulators are coping with the threats posed by climate uncertainty, providing an overview of G20 countries’ green banking experiences in past 20 years. The analysis shows that most realise their ambitions through mandates, leaving monetary mandate unaffected. Considering debate on market neutrality, concerns risk overstretching banks’ mandate, violation Tinbergen’s principle to independence, provided evidence reveals a mismatch between observed policy practice its theoretical underpinnings. Drawing these findings, we argue effective should be based synthesis macroprudential policymaking.