Hard for central banks to extend QE to fund green policies, ex-policymaker says

MUMBAI, Sept 1 (Reuters) – The era of monetary dominance is now passing, making it hard for central banks to extend their nearly decade-long “unlimited” easy money provisions to fund green policies, a former senior adviser to Bank of England Governor Mark Carney said.

COVID-19 has re-established the “efficacy of fiscal policy,” though policymakers are still debating over how much of that stimulus should be focused on supply-side measures versus demand-side, Huw Van Steenis told the Reuters Global Markets Forum (GMF) on Wednesday.

“I suspect there is far more to do on the supply side, but again I am encouraged (by) how many companies have pivoted over the last 18 months,” Steenis said.

Central banks around the world are figuring out ways to incorporate climate change and extend quantitative easing (QE) to fund green policies.

Two policymakers told GMF the onus of promoting sustainable investments should lie with governments and not central banks.

Steenis, who is currently chair sustainable finance at Swiss bank UBS (UBSG.S), said he believed central banks still had a legitimate role to play in maintaining financial stability and market integrity as the transition to sustainability continues.

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