European Central Bank Frankfurt

Green Government Debt for the ‘Green Deal’?

EconPol Opinion
| News

The ‘Green Deal’ in its objective is highly ambitious and will absorb substantive financial resources, so it is not surprising that the potential role of higher public debt is being discussed: the European Central Bank is increasingly requested to provide green finance through its asset purchase programmes and similar suggestions are being made in national debates. But does an ambitious climate policy really provide compelling arguments for higher public debt? Friedrich Heinemann (EconPol Europe, ZEW Mannheim) argues that fighting climate change is not a convincing justification to open new loopholes in European debt rules and fiscal or monetary institutions.