Investors need to allocate their money accordingly – and transparent, comprehensive data combined with innovative technologies can lead the way by helping financial institutions identify green and sustainable projects and companies. Admittedly, it is all very well to say that, but in practice still not quite as easy to do.
I do not regard this challenge as a serious constraint on monetary policy independence, but rather as an inherent aspect of the fact that monetary policy works in the first instance through financial markets and financial institutions. The multifaceted nature of macroprudential policy and its interactions with the governance of monetary policy have important consequences that are not yet fully understood.