NEW MARKET HYPOTHESISRISK COST OF CARBONCENTRAL BANK DIGITAL CURRENCY

NEW MARKET HYPOTHESIS

How to manage climate systemic risk

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RISK COST OF CARBON

Pricing climate risk into the global financial system

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CENTRAL BANK DIGITAL CURRENCY

The case for a positive carbon price

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The Case for a Positive Carbon Price

Transforming Climate Finance and Green Investment with Blockchains (1st Edition)

Expected Publication Date: 1 July 2018

Elsevier Webpage

About the Book

Transforming Climate Finance and Green Investment with Blockchains establishes and analyzes the connection between this revolutionary technology and global efforts to combat climate change. The benefits of blockchain come through various profound alterations such as the adoption of smart contracts, which are set to redefine governance and regulatory structures as well as transaction systems in coming decades. Each chapter contains a “problem statement” that describes the challenges blockchain technology can address.

The first book of its kind, Transforming Climate Finance and Green Investment with Blockchains brings together original visions and insights from the members of the International Core Group on Blockchain Climate Finance, comprising thought leaders, financial professionals, international development practitioners, technology entrepreneurs, fintech innovators, scholars, experienced lawyers, and journalists from 20 countries. This book will help readers understand blockchain technology, how it can facilitate the implementation of the Paris Agreement and accelerate the global transition to green economy.

Chapter 15
Central Banks and Blockchains: The Case for Managing Climate Risk with a Positive Carbon Price

Abstract

A central problem of the climate crisis is a need to mobilize sufficient climate finance to generate a low-carbon transition, and to do so quickly enough to “…prevent dangerous anthropogenic interference with the climate system” (UNFCCC, 1992). In response to this challenge, a case is presented for a coordinated central bank policy that involves a Central Bank Digital Currency (CBDC) for rewarding climate mitigation actions. Justification for the CBDC is framed on a new model for costing externalities and pricing systemic risk. A hypothetical 100-year storyline, called ‘Avoiding Catastrophe’, is used to illustrate how the CBDC could be used to mobilize trillions of dollars of new climate finance and to manage climate risk. Effectiveness of the CBDC reward is appraised by comparing the 100-year storyline with a speech given by Mark Carney—the Governor of the Bank of England—titled ‘Resolving the climate paradox’. A technical brief is provided for a CBDC platform, including recommendations for blockchain ledgers, smart contracts, rules and strategies for ensuring accountability and scalability.

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