Climate change governance by central banks in an era of interlocking crises

In this article, we survey the literature on central bank action on climate change, focusing particularly on how the combined crises of COVID-19, inflation, and Ukraine have affected this action. We argue that the current situation is a critical juncture in which recent crises have created a highly indeterminate situation regarding what central banks might do regarding climate change. To date, some central banks have used these crises as opportunities for expanding their role while others have succumbed to pressure to withdraw from climate action. We explore three dynamics that generate this openness to various potential trajectories for climate action: competing interpretations of inflation’s implications for climate policy; shifting forms of expertise within central banks; and attempts at global coordination of central bank activity. We then argue that how this critical juncture is resolved depends critically on national variations in the institutional character of central banks and their political context.