Public Banks and the Ecological Transition: A Euro Proposal

The European Union’s ambitious “Sustainable Europe” agenda has come to depend crucially on the European Investment Bank as the EU’s “climate bank”. The EIB’s strategic role derives from its unique status as public and supra-national bank. But its potential is still hampered by Europe’s neo-liberal policy orthodoxy. And its achievements are now threatened by pressures weighing on Europe’s policy-makers, from the new priority for rearmament to the public backlash against climate policy. These imminent threats are as good a moment as any to imagine a counter-narrative of greater EU policy ambition to salvage the shaky Paris Agreement, not least in response to America’s withdrawal. A nexus connecting the European Central Bank (ECB) and public banks (PB), both on the EU and national levels, could form the institutional core for a “leap forward” in Europe’s sustainable-finance capacity. Given the power of money creation through this nexus, public banks could assume a bigger role in long-term funding as well as startup funding. Eventually the ECB-PB nexus could be expanded by means of a “green” securitization platform supplying funds for verifiably sustainability-enhancing objectives, the pillar of a progressive financial system mobilizing a global “coalition of the willing” in support of the euro’s internationalization.