It aims to ensure that a broad-based approach is taken and to prevent us from distorting market outcomes. This is why we have to check whether we have unintentionally allowed bias to creep into our securities portfolio, compared to the universe of eligible bonds. But should we go even further and eliminate carbon-intensive assets from our monetary policy portfolios?
How should central banks respond to calls on our social responsibility in the face of a potential twin failure – a market and a political failure? Nobel laureate Jean Tirole reminds us that “our moral duty is to eliminate coal, not to pretend we do”.