Note that an 8-page policy brief for decision-makers that draws on the full 36-page paper is available. 

Headline issue

Both climate change and the low-carbon transition are likely to have deep implications for the functioning and stability of the macro financial system. The discussion of possible risks has largely focused on the private sector; however, this paper argues that central banks should also consider how their operation of monetary policy could affect the transition to a low-carbon economy. Even supposedly market-neutral interventions by central banks may show an unintended structural bias towards carbon-intensive industry incumbents.

Key messages

  • Sectoral analysis of the quantitative easing (QE) corporate bond purchase programmes of the European Central Bank (ECB) and the Bank of England suggests a skew towards high-carbon sectors. For example, it is estimated that utilities, the most carbon-intensive sector by emissions, make up the largest share of purchases for both banks.
  • This carbon-intensive skew raises concerns of disproportionately increasing prices and encouraging additional debt issuance in high-carbon relative to low-carbon sectors. The purchase of such assets is in direct contradiction with, and may undermine, the signals that financial regulators are making about the risks associated with high-carbon investments.


  1. The European Central Bank and Bank of England should increase transparency around the purchases and selection process.
  2. Central banks should investigate the impact of their interventions on both high-carbon and low-carbon investment.
  3. The European Central Bank and Bank of England could consider options for changing their purchasing strategies, by revising eligibility criteria and using monetary policy more effectively to support long-term sustainable growth.
  4. Central banks should communicate and coordinate with fiscal policy-makers and financial regulators.
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