This paper explores the potential contribution of Sustainability-linked Money Creation (SMC) to sustainable economic policies. After situating this policy proposal within the extant literature, we discuss its governance and lay out its macroeconomic accounting using Eurozone data. We then analyze its effects using an ecological PK-SFC framework. Our simulations suggest that, in comparison to a baseline scenario, SMC issues could potentially constitute an anti-inflationary, counter-cyclical green transition policy, that increases biomimetic resilience and contains income and wealth inequalities. We finally discuss the policy implications, as well as the limitations of our findings.
KEYWORDS: SDG finance, stock-flow consistent modeling, Central banking, sustainability-linked money creation.
