Start Submission

Reading: How credible is Central Banks’ defence of the climate?


A- A+
Alt. Display

Policy Paper

How credible is Central Banks’ defence of the climate?


Cecilia Ivardi Ganapini

About Cecilia
Originally from Italy, Cecilia Ivardi Ganapini has studied in Québec, the Netherlands, France and the United Kingdom. She is passionate about finding out how ideas shape institutions, especially when they provide public goods. Cecilia holds a Master’s in Political Economy of Europe (with distinction) from the London School of Economics and Political Science (class of 2019/20). She is now undertaking a PhD at the University of St. Gallen in Switzerland, where she researches skills formation in the knowledge economy with a focus on education policy and the role of the state.
X close


This policy paper investigates the extent to which Central Banks’ commitments to climate mitigation are credible. To do this, it compares the European Central Bank (ECB) and the Bank of England (BoE)’s commitments to environmental action. It conducts a qualitative thematic analysis on 21 central bank’s speeches and 372 newspaper articles informed by audience-cost theory, determining the motivations underlying each commitment. It argues that while the BoE’s designated audiences were the financial markets, the ECB directed its commitment to the Eurozone’s governments. It is found that institutional differences condition the desire to commit to green finance, as the institutional make- up of the ECB causes a need for more accountability in comparison to the BoE. The latter can be achieved by climate action, for it offers significant input legitimacy in the European Union (EU). To counterbalance it with output legitimacy, there is the need for public investment, which is scarce. Hence, the ECB’s commitment to climate action needs to be braver than the BoE’s and reassure governments of its support towards them, by explicitly encouraging green finance, to prompt public investment. This way, the ECB’s commitment achieves output legitimacy. Since the BoE does not have similar legitimacy issues, it commits to prudential policy for the sake of the financial markets, in a nonpartisan way. Hence, differences in the audiences of the two banks can explain why one bank formulates a more ambitious commitment than the other. This policy paper’s results could seem to amount to a relatively small size. Yet, they are quite clear and indicative, and a natural progression of this work would be to analyse other Central Banks, such as the People’s Bank of China, that have also committed to promotional policies and enlarge the sample size.
How to Cite: Ivardi Ganapini, C., 2021. How credible is Central Banks’ defence of the climate?. The Public Sphere: Journal of Public Policy, 9(1).
Published on 08 May 2021.
Peer Reviewed


  • PDF (EN)

    comments powered by Disqus