Quantitative easing, the mechanism used across the developed world to stimulate economies after the 2008 financial collapse, is being championed in a report for the European parliament as a way to boost the green economy.
The procedure involves central banks pumping money directly into the economy, usually by buying assets from financial institutions so they can raise the amount they lend. In his report, professor Victor Anderson of Anglia Ruskin University argues that "green quantitative easing" (GQE), whereby the money created is used specifically to boost the green sectors of the economy, would help Europe move towards a sustainable economy.
"The Bank of England has a duty to play its part in helping the shift towards a greener economy no longer dependent on dirty sources of energy," he says. "EU governments should be urgently examining every type of policy that could be used to help in this low-carbon green revolution. GQE deserves to be near the top of their action list."
The GQE advocated in the report would entail central banks buying debt from private sector businesses, local and regional governments, and social enterprises, where the organisations can demonstrate that money will be used for green purposes. Rather than boosting banks' reserves and profits, which has been the main outcome of the recent conventional quantitative easing, GQE would boost the green sector of the economy, says Anderson.
According to his report, there are two clear reasons for preferring GQE to conventional methods. One is the need to move to an increasingly green economy, with GQE providing one opportunity and mechanism for funding such a transition. The other is that GQE provides money to productive projects, rather than hoping it will reach such projects through the finance system, which may absorb the funds.
UK Green MEP Molly Scott Cato, who commissioned the report, said: "Quantitative easing to date has further benefited wealthy elites. We need the money we create to be invested in a future we want to see. This public investment will create jobs for thousands of unemployed people while simultaneously building up our green infrastructure."