Dafermos, Yannis, Gabor, Daniela, Nikolaidi, Maria ORCID: 0000-0002-8188-5482 and van Lerven, Frank (2020) Decarbonising the Bank of England's pandemic QE: 'perfectly sensible'. Technical Report. New Economics Foundation, London.

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Abstract

According to the new governor of the Bank of England, Andrew Bailey, aligning the Bank’s corporate bond purchase scheme with the government’s climate goals is a ‘perfectly sensible thing to do’ and should be made a ‘priority’. Yet in its current framework, the pandemic corporate bond purchase programme is heavily biased towards carbon-intensive sectors – and thus at odds with the government’s environmental objectives. This carbon bias means the programme may lower the cost of borrowing (an implicit subsidy) and encourage more debt issuance by the most carbonintensive firms relative to low-carbon firms. To help support the governor’s efforts, this briefing sets out two alternative purchase strategies – the ‘Lower-carbon pandemic QE’ scenario and the ‘Low-carbon pandemic QE’ scenario − that would help decarbonise the Bank’s corporate bond purchases (boosting green investment in the process) and ensure that the Bank’s policy interventions are consistent with its rhetoric.

Item Type:	Monograph (Technical Report)
Uncontrolled Keywords:	climate change; monetary policy; QE
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
Faculty / School / Research Centre / Research Group:	Faculty of Business Faculty of Business > Department of International Business & Economics Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Last Modified:	01 Nov 2022 16:49
URI:	http://gala.gre.ac.uk/id/eprint/37785

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