Open AccessFOSTERING GREEN ECONOMY THROUGH NEW FINANCIAL INSTRUMENTS IN CENTRAL BANKS’ PORTFOLIOS
Author(s) -
Branka Topić-Pavković
Publication year - 2020
Publication title -
agrofor
Language(s) - English
Resource type - Journals
eISSN - 2490-3442
pISSN - 2490-3434
DOI - 10.7251/agreng2003072t
Subject(s) - bond , finance , green growth , renewable energy , business , bond market , investment (military) , green economy , financial instrument , sustainable development , ecology , politics , political science , law , biology
The green economy implies the use of renewable energy from biomass, solar panels, wind power plants and recycled waste, while providing the environmental protection, human well-being and sustainable economic progress. As with other investments, the important question is how to find sufficient sources of funds and get investors interested in these projects. Global green bond issuance started along with the increasing need for financing green businesses and technologies, resolving climate change issues and financing through efficient emission of green securities and trading on markets. The proceeds of these bonds are explicitly used to finance new or existing green projects. This paper examines the concept and evolving of green bonds with emphasis on the new role of central banks in greening financial systems and its impact towards a green economy. The green bond market dates back to 2007, with launching the World Bank Green Bonds programme in 2007 and the Climate Awareness Bonds by the European Investment Bank (EIB) in 2008 for financing renewable energy and energy efficiency projects. The significance of making bond between sustainable economic development and environmental issues is evident through the rapid growth of these green instruments. The objective of this research was to identify new types of financial instruments intended to improve ecological projects, as well as to compare effects of green bonds utilization in different countries and by different institutions. The results show the improvement of the financial market and investor profits, while there is simultaneously significant growth of green projects pointing to the benefits of using this new form of financial instrument in promoting the green economy.