Governing Finance To Support The Net-Zero Transition: Lessons From Successful Industrialisations

UCL Institute for Innovation and Public Purpose, Working PaperSeries (No.WP 2022/01). Available at: https://www.ucl.ac.uk/bartlett/public-purpose/wp2022-01

47 Pages Posted: 9 May 2022

See all articles by Olga Mikheeva

Olga Mikheeva

UCL Institute for Innovation and Public Purpose

Josh Ryan-Collins

UCL Institute for Innovation and Public Purpose

Date Written: January 21, 2022

Abstract

The transition to a net-zero carbon economy requires a major shift in financial flows. Financial policy bodies — central banks, financial regulators and ministries of finance — clearly have a role to play in supporting such a shift. Up until now, policy discourse has envisaged this role primarily as one of enabling and de-risking private finance, via support for new ‘green finance’ markets and instruments (e.g. green bonds, sustainability taxonomies and ESG derivatives) alongside encouraging the disclosure of climate related financial risks to support effective price discovery in financial markets. Historically, however, financial policy bodies have played a more direct and coordinative role in industrial and economic development, often via close collaboration with dedicated public financial institutions such as national development banks. This paper examines the governance of industrial credit and capital market financing in six countries - Mexico, Canada, Norway, Japan, Korea and China - which successfully and rapidly industrialised at different periods in the 20th century. We examine how central banks and ministries of finance coordinated financial policy to achieve rapid structural economic change, and consider the implications for the net-zero carbon transition.

Keywords: Financial governance, financing of industrialisation, central banks, development banks, ministries of finance, green transition, net-zero carbon transition

JEL Classification: E61, E63, E65, G21, G23, G28, O23, O25

Suggested Citation

Mikheeva, Olga and Ryan-Collins, Josh, Governing Finance To Support The Net-Zero Transition: Lessons From Successful Industrialisations (January 21, 2022). UCL Institute for Innovation and Public Purpose, Working PaperSeries (No.WP 2022/01). Available at: https://www.ucl.ac.uk/bartlett/public-purpose/wp2022-01, Available at SSRN: https://ssrn.com/abstract=4081421 or http://dx.doi.org/10.2139/ssrn.4081421

Olga Mikheeva (Contact Author)

UCL Institute for Innovation and Public Purpose ( email )

11
Montague Street
London, WC1B 5BP
United Kingdom

Josh Ryan-Collins

UCL Institute for Innovation and Public Purpose ( email )

11
Montague Street
London, WC1B 5BP
United Kingdom

HOME PAGE: http://https://www.ucl.ac.uk/bartlett/public-purpose/

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