Campiglio, E., Godin, A., Kemp-Benedict, E. and Matikainen, S. (2017) 'The tightening links between financial systems and environmental issues', in Arestis, P., and Sawyer, M., Economic policies since the Global Financial Crisis, Palgrave Macmillan, London, pp. 313-356

Abstract: This paper investigates the implications of the policy changes triggered by the Global Financial Crisis on the transition to a low-carbon society. The immediate effects have mostly been negative: national governments have retracted from public spending and fiscal support to clean technologies; new macroprudential regulation has discouraged banks from lending to low-carbon projects; monetary policies have perpetuated the high-carbon lock-in of the economic system. However, the transformed macroeconomic and institutional setting, together with the increased awareness of the links between financial dynamics and natural resources, has also created new space of opportunity for low-carbon investment and financing. New concepts and policy proposals have emerged, including the ‘green growth’ narrative, the idea of aligning macroprudential policy to climate objectives, and the suggestion to use unconventional ‘Quantitative Easing’ monetary policies to support low-carbon investment.