Department of Economics & Centre for Sustainable Finance

Greening the Eurosystem collateral framework

Project information

Principal Investigator


    • Daniela Gabor (University of the West of England)
    • Maria Nikolaidi (University of Greenwich)
    • Frank van Lerven (New Economics Foundation)



    • 2019–2020


    The collateral framework of the Eurosystem is a crucial component of the euro area financial system, since it determines the way that commercial banks obtain central bank liquidity and affects the credit conditions facing non-financial corporations.

    However, in its existing form it undermines decarbonisation efforts since it disproportionately supports polluting companies. This project investigates how the Eurosystem collateral framework can become greener, as well as what implications this would have for credit conditions, investment and emissions.

    The project explores alternative options for greening the Eurosystem collateral framework using a combination of:

    • haircut adjustments according to the dirtiness and greenness of corporate securities,
    • exclusion of high-carbon securities and
    • inclusion of environmentally friendly securities.

    The project also compares approaches that rely on the climate risk exposure of financial institutions with approaches that focus on the climate footprint of securities.


    Dafermos, Y., Gabor, D., Nikolaidi, M., Pawloff, A., van Lerven, F. (2021). Greening the Eurosystem collateral framework: how to decarbonise the ECB’s monetary policy, New Economics Foundation.