Flashcard: Integrating Climate and Monetary Policy — 24 carte

Monetary policy channels — definition?

Mechanisms through which policy affects inflation.

Expectations channel — role?

Shapes future inflation expectations influencing current behavior.

Credit channel — impact?

Affects borrowing conditions for households and firms.

Asset price channel — influence?

Impacts household wealth and spending via asset prices.

Exchange rate channel — effect?

Alters import/export prices, influencing inflation.

Collateral requirements — purpose?

Set criteria for assets used as security in liquidity operations.

Haircuts — function?

Reduce collateral value to mitigate credit risk.

Eligible collateral assets — criteria?

Assets meeting central bank standards for safety and liquidity.

Unconventional policies — examples?

Negative rates, QE, forward guidance, new liquidity facilities.

QE transmission — main channels?

Portfolio rebalancing, bank lending, confidence effects.

Portfolio rebalancing — mechanism?

Asset purchases raise prices, lower yields, stimulate borrowing.

Bank lending channel — effect?

QE increases reserves, encouraging more bank loans.

Confidence channel — role?

Boosts market sentiment, increases spending and investment.

Climate risks — types?

Transition and physical risks affecting asset values.

Transition risks — definition?

Risks from shifting to a low-carbon economy.

Physical risks — example?

Damage from storms, floods, wildfires.

Climate risk exposure — approach?

Assessing how climate factors impact financial assets.

Climate scenarios — purpose?

Estimate future climate impacts on markets and assets.

Climate footprint approach — focus?

Measuring and managing environmental impacts of assets.

Green and dirty activities — meaning?

Classification of sectors based on environmental impact.

Emission indicators — examples?

Carbon intensity, decarbonisation rates.

Greening monetary policy — methods?

Tilting asset purchases, adjusting collateral, using green bonds.

Weighted Average Carbon Intensity — purpose?

Measures portfolio greenness by emissions per value.

Green QE — definition?

Purchasing green bonds to promote sustainable investments.