How green is my central bank investment pontliowillbeeatbon-neutaly 2050. Reading up, | found many western central banks makingsimiar announcements. Puzzling. central bank hokls mos fs inves _ment portfolio in gol, and ational and foregn cash fe atereien free Hr wre pigs weer bonds and eash asets were carbon-neutral? Gold, Dzarely, was exchuded from the ealulus of carbon ‘eutralty apparently because there was no metheel tojudge this find inconceivable that sok mining Iscarbon-neutal, butt that pass. "The ltrature on the subject, putting it politely, completely misses basic tenets of government finance. Govemment revenues are Not dite linked to expenditures, Goverment do not spend omeximisetax even, This equally trae oft financed government spending. Even fsuch debi- fAnanced spending is only used for sapital expenditure, the portale of pital spending eannot be judged ‘ccordingtotscarbon impact since ‘large chunk of such investment is financial investment. Nor da they _Renerate revenues solely to spend them on acqulring goods and serv~ Joes, tke households do. Further, @ lange chunkofgovernmentexpendi- tures are transfers, which seck 10 fnflence the allocation and dist- bution of resources in an economy. These are financed by debtor taxes, tbutare nos ‘spenuingin he sense we use ube erm for firms and households. Unemployment benelit used to buy fesil fuels s bad for earbon but that ‘doesnot make It carbon- postive ven if domestic debt isused to nance a high- carbon investment there sno ay any central bank fan refuse to fs Such debt ws (a) es ot pat of themandateofacentralbanitotll thegevernment how tospend its money (specific sovereign bonds ‘cannot be earmarked toa specific investment activ Ts Rank of Finland has announced that its ATHIN ROY sky asthescure sued to finances fiscal deficit and fethersfore compositionally neta With fran debe, the Ink o ink ie even more compelling further the teasons why contal aks segue fevelan debe have absolutely nothngta do with the athe ieeraectet eee rete cen ocoume, ings are iret But he question {henarses Wy dental bansividonpoatests $n the in place? Teac ofthe alts at ‘any westem central banks have offered to thelr Fanta sctorntimesofste vakangearton ‘nal of these highly ings vents fs Compounds hese ‘Green climate and other bonds, and ied income ass dooffer an exp andexcanteguar- ante fearon neutrality. To the extent that these ‘orm prt of wrerlgn iasanc, isan total Torowingeould bused as pla fe metre Thre are to prob tems thts The fist that detracts rom the serio Tate power to reuse fungible ‘esourocs (whether to debt, ‘which ian essential component fof stateraft. imagine war or pate ‘demic finance being nied by the ea to be earbon ner ome proses can be made as the recent indonesian Suse issue showed. The second that gen financing does not guaran see green procure rato ae ea ‘ronal agro bond used nance a ‘ihe projst but the tel end elects ws Powe and run thera aed and the ral tray primary used to transport mining op then eanithesaidiobecarboreneulrae Topo thal central banks hang proved them setvesso roundly incompetent at avoiding nancial Sector bailouts and traumatised by the solapse of their theological anchor — that fnanelal markets are always ficient allocator of resources — and Faced withthe realty that no amount of independ ‘ence wil rotet them fromthe impactof aUS taper {antrum ora Chinese mega move —have occupled themselves with climate change asa diversionary PR exercise {0 mask the reality that they have ‘and unjst global nancial system, ‘This silly posturing by central banks is yet another consequence of what Ihave been arguing, {the whole problem with how gen is viewed in the world of fnance —as the only way to stave of prudential risk and suffering (0 rieh people as imate change threatens thei ves. This yet again bypasses the central problem. As the workd has cathonisedaminority of people havebeen consin {ng too mich and a majority too lite. Without convergence in consumption pattern, there wil Always be opportunities or carbon spivers. Unless thonogitiveeternalltiesof the eonsuimplon ofthe afluentare recognise and discouraged with green investments eepogsing prosperity gapsin poorer seograpies, the climate change issue will not be effectively addressed, ‘Klaus Schvab, founder of the World Economic Forum, recently spoke eloquently about the danger slob warming pose ois graehildren in 2080 ‘but tbe danger to a Kid in Hombay sm beng, inundite! inthe next monsoon, not sea leveling In 200. But significantly accelerating the prosperity ‘of tat child would involve greaterstciee onparcof DrSehwabisgranxcl fo ou common plat esustanabie comerpencelaconsumpuom paler will involve Tess green consumption by the srandehikiren othe rich, and more, aso gro=n, con ‘Smpon by dhe grandchildren ofthe poor. Merely providing reeling and wind energy opportunites fortheriehtoperpetiite tier unoqualisin ies isnot guingtodo bhetrck,