From Price Stability to Climate Stabilization? The Political Economy of Green Central Banking

Doctoral & master thesisFinancial regulation and innovative financingJérôme DeyrisPublicationsResearch areaResearch FellowsComments Off on From Price Stability to Climate Stabilization? The Political Economy of Green Central Banking
Author(s) :
Jérôme Deyris

Thesis presented on July 10, 2023

This PhD thesis focuses on a recent and rapidly spreading, but highly diverse phenomenon: the integration of climate and environemntal issues by central bankers. To do so, the author draws from different approaches in order to understand what drives (some) central banks to embrace this issue, why they do so and how. This work is composed of four main chapters: the first is more theoretical, the next two more empirical, and the fourth more normative. All chapters have been conceived as stand-alone research pieces, and three of them are based on collective work with co-authors. The manuscript of the thesis is available in open access here

In the first chapter, we look at how the institutional framework in which central banks are embedded determines the way they integrate climate-related issues, but also how their responses to this challenge could contribute to altering this framework. Thus, while independent western central banks may at first glance benefit from limited latitude to incorporate such concerns, political authorities’ inaction and increasingly disruptive climate dynamics may well push them to adopt new roles… which may ultimately become a new normal. This chapter is the result of joint work with Emanuele Campiglio and Moritz Baer, published in Ecological Economics (2021)

In the second chapter, we examine the case of the European Central Bank (ECB) and its surprisingly swift integration of climate change. Through a combination of semi-structured interviews and a qualitative study of the ECB’s documents, speeches, and answers to European Parliamentarians regarding the climate challenge, I retrace how this issue moved up the institution’s agenda. While climate change has successfully become a mainstream concern, the way in which it should be tackled remains divisive, characterized by antagonistic views regarding the role central banks should play in the low-carbon transition. This chapter recieved the 2022 Herbert Simon award for the best paper by a young economist at the EAEPE Conference and was later published in New Political Economy (2023).

In the third chapter, we depart from our European focus to investigate central banks’ communication on climate-related matters on a global scale. Using an original database of more than 31,000 speeches retrieved through systematic web-scrapping and occasional archival work, we (i) document the differentiated rise of climate-related topic in central bank speeches, (ii) explore the various ways in which this topic is addressed, and (iii) attempt to understand the determinants of this treatment through exploratory econometric work. This work was done in collaboration with Emanuele Campiglio and Davide Romelli and is to be published as a working paper before the end of 2023. 

In the fourth chapter, we discuss the suitability of the high level of independence that characterizes most modern central banks. After recalling the contingent nature of this institutional arrangement and its increasing mismatch with contemporary central banking practices, we explore the different avenues of reform discussed in the literature to try to mitigate the growing gap between the legal framework and actual practices. This chapter draws from a work with Laurence Scialom and Gaëtan Le Quang  for which only a preliminary draft in english is available

Access the thesis on or available in open access (courtesy of the author) here