Central Banking: Theory And Practice In Sustain... May 2026

Historically, central banking theory was built on the principle of . The idea was that central banks should not pick "winners and losers" when conducting open-market operations or setting collateral frameworks.

The frontier of sustainable central banking is moving toward . While carbon has been the focus, there is growing realization that the loss of biodiversity and ecosystem services (like pollination or clean water) poses a similar systemic risk to the global food supply and pharmaceutical industries. Central Banking: Theory and Practice in Sustain...

The transition is not without controversy. Critics argue that by pursuing sustainability goals, central banks are engaging in The concern is that if central banks take on tasks traditionally reserved for elected governments (like industrial policy), they may lose their political independence. Proponents, however, argue that if the planet’s climate is unstable, financial stability is impossible to achieve—making sustainability a core part of their existing mandate. 5. The Future: Biodiversity and Beyond Historically, central banking theory was built on the