Aligning sovereign bond markets with the net zero transition: the role of central banks - video

Sovereign bonds play a central role in public finance, financial markets, and the economy. They are an essential instrument for aligning financial flows with the transition to net zero, yet the alignment of sovereign bond markets requires coordinated action across several stakeholders in the financial system. Central banks are in a unique position to contribute in three key ways, while also balancing the unique constraints from their remits.

First, as owners of sovereign bonds, central banks can reallocate their portfolios of sovereign bond components, especially where remits tend to be more permissive such as for non-monetary policy portfolios. Second, central banks are uniquely placed as standard-setters and supervisors to contribute to the development and implementation of sovereign risk assessment and alignment methodologies. Third, central banks can, within the independence principles that govern their relation, engage with sovereigns, international institutions and public agencies on net zero national and international policies.

To mark the launch of our flagship policy report discussing the role of central banks in aligning sovereign bond markets with the net zero transition, the Grantham Research Institute at LSE and the Council on Economic Policies (CEP) organised this online launch event. This event included a brief presentation of the report’s key findings and implications for central banks and a panel debate with key participants.

Host: Nick Robins (Grantham Research Institute)

Presentation: Pierre Monnin (CEP and Grantham Research Institute)

Panellists:

• Magali van Coppenolle (Climate Bonds Initiative)
• Torsten Ehlers (NGFS, International Monetary Fund)
• Konstantin Makrelov (South African Reserve Bank)