The development of a Green CMU can support the move to a CMU by adding depth and diversification to the financial instruments available, also enhancing the risk sharing capacity of the EU financial system. Green capital markets are dynamic and relatively well integrated in Europe. They provide a rapidly growing market and are the location of choice for green bond issuance and ESG investment.
Important elements of a Green CMU include corporate sustainability disclosures, green financial products with official EU seals, such as the EU Green Bond Standard, and harmonised regulation and supervision for sustainable finance. A Green CMU would both make the EU economy more resilient and more environmentally sustainable. But what role can central banks play in tackling climate change?