Studies from New York University (NYU) Further Understanding of Climate Change (Green Monetary Policy: What the Federal Reserve System Can Learn From the European Central Bank): Climate Change

2025 AUG 05 (NewsRx) -- By a News Reporter-Staff News Editor at Climate Change Daily News -- Investigators discuss new findings in Climate Change. According to news originating from New York City, New York, by NewsRx editors, the research stated, “Central banks like the European Central Bank (ECB) have started incorporating climate change considerations into their monetary policy tools. This Note refers to this phenomenon as green monetary policy (GMP).”

Our news journalists obtained a quote from the research from New York University (NYU), “Given the crucial role of central banks and other monetary authorities in bank supervision and regulation, GMP has emerged as a solution to tackle the continued financing of fossil fuels and industries that have accelerated climate change. Among central banks, the ECB has emerged as a leader in GMP. However, the United States Federal Reserve Board (the Fed) has signaled a refusal to engage in any climate policymaking, including GMP. This paper argues that the Fed should follow the ECB by implementing GMP, given the central banks’ similar structure, general tools of monetary policy, and monetary policy-related goals. Although the Fed, unlike the ECB, does not have a secondary mandate to support general economic policies including environmental and climate-related goals, the Fed and the ECB are both mandated to promote price stability and act as a supervisor of financial risk. This Note analyzes the implications of the potential implementation of GMP by the Fed, comparing it to the ECB’s GMP, structure, and statutory mandates. It also explores key concerns and counterarguments in the literature against Fed implementation of GMP, which deal with independence, accountability, and mission creep.”

According to the news editors, the research concluded: “Despite these concerns, the Fed should continue to research climate change’s impact on macroeconomic stability and apply climate change considerations in its collateral policy, as the ECB has already done.”

This research has been peer-reviewed.

For more information on this research see: Green Monetary Policy: What the Federal Reserve System Can Learn From the European Central Bank. New York University Law Review, 2025;100(3):933-970. New York University Law Review can be contacted at: New York Univ School Law, 110 West Third St, New York, NY 10012, USA.

The news correspondents report that additional information may be obtained from Soomin Shin, New York University (NYU), School of Law, New York, NY 10012, United States.

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