How central banks can trigger a massive reduction of global CO2 emissions and tackling the pandemic crisis by using new tools of green bonds and guarantees.
WHAT WE DO
The Future Finance Commission of the World Future Council identifies, develops and disseminates policy proposals for reforming the financial and monetary system. Sustainable economies require productive and stable financial markets as well as monetary resources for climate protection.
WHY THIS IS IMPORTANT
Our current economic system is unsustainable, unfair, unstable and no longer improves our quality of life. In changing our economic system towards sustainability and common wealth, we can enable climate change mitigation, empower millions of people and lead the way towards a fairer future.
BE PART OF THE SOLUTION!
Our aim is to pass on a healthy planet and just societies to our children and grandchildren.
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How can we mobilise the financial means to meet the 1.5°C limit?
In order to even achieve the previous 2°C target, an estimated $1000 billion is needed to be invested annually in the development of renewable energy solutions. To meet the 1.5°C limit in line with the Paris Agreement the necessary investments in renewable energies would be significant higher. We outline how the large investment sums could be financed between a co-operation of developing countries, Multilateral Development Banks, the private sector and Central Banks.
How can we convert stranded fossil fuel assets into renewable energies?
The necessary fast exit out of burning fossil fuels would lead to a massive increase of fossil stranded asset. We outline a plan how strand fossil fuel assets could be converted into renewable energies investments.
Can our production systems become sustainable and balanced within our existing political and economic order?
This is, in principle, possible. The expected problems in financing such a transition can be overcome once the analysis is based on actual economic processes. This paper aims to move beyond the current purely GDP-oriented debate on growth by highlighting the differences between real finiteness and the apparent finiteness of GDP. Growth and finiteness have to be reconciled if we want peace and sufficiency for possibly over 10 billion people in the future.
How Central Banks could help tackling climate change
Monetary policy is usually regarded only as a tool to control inflation. But this view describes the capabilities and the duties of a Central Bank in a very limited if not incorrect way. As shown during the financial crisis Central Banks are the most powerful institutions in our current economic system. Thus, one crucial duty of Central Banks is to support climate finance measures to tackling the systemic risk of a climate catastrophe.
The World Future Council develops feasible proposals on the future role of central banks. We analyse existing proposals for monetary reforms and highlight how minimal changes could lead to vast improvements of current monetary policy and generate resources to finance crucial climate protection investments and the Sustainable Development Goals (SDGs) of the UN.
Economics and Sustainable Development go hand in hand
A basic understanding how our economic system is working on a macroeconomic level is crucial to deal with almost all challenges described in the 17 SDG from the UN in successful way. One of the popular misunderstandings is the relation of debt and assets on a macroeconomic level in contrary to a single household perspective.
Each household can only earn interest on its savings if another economic sector borrows money and becomes indebted but at the same time makes enough profit with the borrowed credit to service the interest and repayment costs. If this is not the case no interest can be generated. The amount of financial assets of one side is always exactly the same as the debt of the other side.
Looking at this from a global perspective, a country can only reach an export surplus if at least one other country has a matching deficit. The attempt of all countries to achieve a surplus simultaneously will fail because the trade balance sheet of the global economy is always zero.