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In the face of an ecological transition, central banks are finding conventional tools to manage the economic conditions are no longer adequate. Conventional tools manage short-term changes in demand, whereas climate change is a long-term phenomenon which will impact supply conditions. This article discusses the re-introduction of developmental monetary policies to provide liquidity to industries critical for social provisioning during an ecological transition. A potential new tool is central bank digital currencies (CBDCs). CBDCs could be lent and/or used to partially capitalize a system of community development banks. The article discusses the logistics and limitations of CBDCs as a developmental tool.

Greening Monetary Policy: CBDCs and Community Development Banks