Green monetary policy instruments – identification and analysis

Green monetary policy is a monetary policy that, in addition to maintaining price stability, also aims to increase social welfare and promote environmental sustainability. The main aim of the paper is the identification and exegesis of the central banks’ activities towards green monetary policy. The research verifies the hypothesis stating that modern central bank instruments are evolving toward more sustainable tools of implementing monetary policy. The paper presents new instruments of green monetary policy, created by incorporating emission reduction targets into traditional monetary policy instruments. The controlled comparative case study indicates that major central banks have different approaches to redirecting their monetary policy toward sustainable development. Some of them, like the FED, remain sceptical about green monetary policy instruments, while others (like the ECB or Bank of Japan) incorporate them into monetary policy. The research allowed for the identification of the main green monetary policy instruments, and it also proved that at the moment, it is difficult to assess whether they are effective and achieve the desired objectives.