Dr. Steffen Murau| steffenmurau.com

‘Monetary Architecture and the Green Transition’ (with Andrei Guter-Sandu and Armin Haas)

There are several roadmaps for financing the Green Transition, but most scholars agree that debates have not yet yielded convincing results. The literature typically sketches out a ‘triad’: taxation, treasury borrowing, and central bank money creation. This framework has several shortcomings. It lacks a deep conceptualisation of credit money, does not gauge the monetary and financial system systemically, and disregards the processual dimension of financing. This paper addresses these shortcomings and puts forth a more comprehensive view of financing the Green Transition.

We perceive the monetary and financial system as a hierarchical web of interlocking balance sheets, and use the concept of ‘monetary architecture’ to describe historically specific formations. Each ‘monetary jurisdiction’ (e.g. Eurozone or US) is subdivided into four ‘segments’: central banks, commercial banks, non-bank financial institutions, and a fiscal ecosystem made up of treasuries and off-balance-sheet fiscal agencies. Each segment comprises ‘institutions’ with specific ‘elasticity space for balance sheet expansion needed to finance investment. We contend that monetary architectures as systems, not individual balance sheets, must mobilise elasticity space for financing the Green Transition. Using examples from the US and the Eurozone, we assess the interplay between these segments and their potential role in financing the Green Transition.

Presentations at the EAEPE online conference (09/2021)

Co-authors:
Andrei Guter-Sandu, London School of Economics and Political Science
Armin Haas, Global Climate Forum, Berlin

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