Lecture 13: Money & Green Finance across the World

Question 1

different types of green financial products

Answer 1

1. retail banking
2. corporate and investment banking
3. assets management
4. insurance sector

Question 2

retail banking

Answer 2

designed for individuals, households or small companies

related to the housing market and the mortgages

Question 3

corporate and investment banking

Answer 3

2 main mechanisms

equities (stock options) = investor is shareholder companies

bonds (fixed income) = investor is creditor of company / government

Question 4

equities

Answer 4

stock options = investor is shareholder company

Question 5

bonds

Answer 5

fixed = investor is creditor of company / government

less risky, carbon credits are possible as income

Question 6

assets management

Answer 6

fastest growing

funds you pay and then they invest

Question 7

insurance sector

Answer 7

every insurance

Question 8

green finance

Answer 8

one that creates values and transacts financial assets in ways that shape real wealth to serve the long term needs of an inclusive environmentally sustainable economy

Question 9

main goals of green finance

Answer 9

internalize externalities

reduce risk perceptions

from short-term to long-term investments

coordinate public and private sectors (collaboration to help the above)

Question 10

helping developing countries

Answer 10

development aid and foreign direct investments

foreign direct investments

sovereign green bonds

Question 11

foreign direct investments

Answer 11

firms giving to firms

is about getting ownership

Question 12

sovereign green bonds

Answer 12

A specific debt instrument issued by the government

Green bonds = focus on environmental governmental strategies

Drawback, even more debt

Question 13

challenges for green finance -> developing countries

Answer 13

Business environment, weak institutions and unsubstantial governance (corruption, does your money really go there?)

Fragile and conflict affected countries (context, other priorities for aid)

–> need to enable market regulation, implement systematic national action plans and support new policies

Question 14

challenges for green finance –> developed countries

Answer 14

Lack of transparent reporting

Poor control

Disagreements between countries

Question 15

social function money

Answer 15

= money is an institution for society to work with, the confidence we have in money (institutionalist view)

Question 16

what is money

Answer 16

medium of exchanege

unit of account

store of value

social function

Question 17

vicious cycle

Answer 17

Vicious cycle between ecological destruction (debts) and economic growth

Question 18

debt based money creation

Answer 18

As long as the economy grows at a faster pace than the debt, governments are incentivized to pursue GDP growth

Question 19

solution debt based money creation

Answer 19

One possible solution to reconcile the real economy (level of production and exchanges) and financial economy (accumulation of money) with sovereign money creation

Question 20

quanitative theory of money

Answer 20

M x V = P x T

m = money supply

v = velocity of circulation

p = average price level

t = volume of transactions of goods

Question 21

different challenges green finance

Answer 21

risk, long-term perspectives, collaboration between public and private sectors, different contexts