Banking regulation of green financial markets

The article examines contemporary international approaches to the regulation of green financial markets from the perspective of central banks, whose regulatory activity in this field is defined by the demand to neutralize the performance of environmental hazards at the macroeconomic level. The research is aimed to illuminate the central banks’ methods and levers in environmental risk management. The following instruments of green financial regulation and green financial markets development are identified and analysed: stress-testing; reserve requirements; capital requirements; creating prerequisites for the issuance, purchase and sale of green financial instruments. Based on the international theoretical and statistical data study on the specified levers, it is proven that the European Central Bank applies almost all the highlighted instruments. The development tendencies of sustainable debt instruments are assessed. It is revealed that the amount of green debt securities in central banks' portfolios is continuously growing: in the Euro area, their outstanding amount has more than doubled over 2021-2023, with their share in the amount of all debt securities having increased from 3% to 6%. Ultimately, the conducted research reflects that today central banks are only at the first stage of financial markets greening. For their further development, it is necessary to clearly specify relevant effective tools.