By including “environmental sustainability” in the strategic review launched in early 2020, the European Central Bank (ECB) signalled that it was taking seriously calls to integrate monetary policy into the fight against climate change and, more broadly, against the ecological crisis threatening our societies and economies. To contribute to this exceptionally important debate, we are publishing two notes on the role of monetary and prudential authorities in the ecological transition.

In this note, Jézabel Couppey-Soubeyran offers an overview of the options available for greening monetary policy, making environmental sustainability a genuine objective of the European Central Bank. On the one hand, “light green” options: these consist in greening the conditions for access to liquidity and asset purchases by the ECB and are all feasible within the current institutional framework or in keeping with its ethos. On the other hand, the bright green option: this would be part of a green policy mix, and would enable the financing of the ecological transition by the central bank in a way that does not fuel debt and safeguards financial stability. This is the option that requires the most institutional change, but is arguably the one that would most advance the ecological transition.

In the previous note, Wojtek Kalinowski and Hugues Chenet** propose to overcome the obstacles that have so far prevented central banks and supervisory authorities from taking action.