Ivan I.

Demichev July 19, 2023

ECN 297

I.
● Environmental, social, and governance (ESG) issues are prioritized when analyzing
financial investments in businesses through the sustainable finance (also known as ESG)
investing lens.
● Despite rising interest in and support for ESG, nothing has changed in the way capital
markets actually operate, in part because investment manager compensation has a short
time horizon and is rarely linked to longer-term objectives.
● Due to economic incentives and the risk of losing their jobs, the investing industry
focuses primarily on short-term success, which prevents it from taking long-term ESG
considerations into account.
● The change of enterprises toward a regenerative and sustainable path cannot be sparked
by ESG transparency and disclosure alone.
● Over the past two decades, impact investment has developed, drawing new practitioners
and showcasing its potential through impact portfolios.
● The Global Alliance for Banking on Values (GABV) exemplifies how banking may
advance society's goals while continuing to be profitable and experiencing less volatility
than the industry as a whole.
● Returning to culture and fundamental principles in banking while emphasizing
relationship banking and useful loans in the real economy will benefit society.

II.
● Due to banking affecting both the general welfare and the state of the economy, it has a
distinctively public nature and is unlike other businesses.
● The regulatory framework for banking places a strong emphasis on systemic risk
management, consumer protection, bank safety and soundness, and depositor protection.
● The banking industry has become more robust and accountable thanks to regulatory
changes, but these changes do not address how well banking meets the demands of a
sound economic system.
● What is advantageous for banks in the short term and what is beneficial to society over
the long run are at odds with one another.
● The current financial system does not fully meet the productive requirements of society
and favors short-term bank profits.
● Public sector engagement and innovative collaborations between the public, private, and
philanthropic sectors are necessary to address the financing needs of society, particularly
in areas such as infrastructure and ecological transformation.
● The idea of a banking system with a solely private sector is challenged by the fact that
private banking depends on the public sector for its solvency.
 ● Institutions in the public and quasi-public sectors are essential for filling funding
shortages and ensuring a smooth flow of money toward societal objectives.
● The World Bank and other development banks need to migrate to a role of being effective
"general contractors" by setting up crucial financings that solve social and ecological
concerns.
● Public policy has an impact on investment decisions, which should take into account the
qualitative nature of growth and make a distinction between actual investment in the
productive sector and financial investment in already existing assets.

III.
● Money is created by the banking system through lending, not by the government or
central banks printing physical currency.
● There is a debate about whether banks should have the privilege of creating money or if it
should be turned over to the government in a sovereign money system.
● Advocates for sovereign money argue that it would prevent reckless behavior by banks,
but it may limit the dynamism and flexibility of the real economy.
● To stop irresponsible banking practices and give priority to lending for productive
reasons, tighter rules and capital requirements should be put in place rather than
switching to a sovereign money system.
● According to the Philips Curve theory, the Federal Reserve in the United States has two
goals: full employment and price stability.
● Due to German dominance, past experiences with hyperinflation, and budget deficits, the
European Central Bank places a high priority on price stability.
● The Philips Curve's assumed relationship between inflation and full employment is
oversimplified and ignores contemporary economic complexity.
● QE, a non-conventional tool used by central banks like the FED to assist the economy
and stabilize the financial system.
● Despite the success of QE, there is little public discussion on changing the mandate of
central banks, and it is necessary to investigate the prospect of utilizing central bank
authority to promote qualitative goals like promoting green energy or reducing inequality.
● MMT, or modern monetary theory, questions accepted beliefs about money, inflation,
deficits, and unemployment.
● According to MMT, governments are not like homes or businesses and can always print
more money if they have their own currency.
● According to MMT, as long as the government deficit stays within specific bounds, it
won't matter as much as previously thought.
● In a developing economy, MMT emphasizes the necessity of a growing public sector
deficit and casts doubt on the idea of "balanced public sector budgets."
● MMT highlights the potential for harnessing money creation for social and ecological
imperatives while supporting government spending up until there is full employment.
● MMT, or modern monetary theory, questions accepted beliefs about money, inflation,
deficits, and unemployment.
● According to MMT, governments are not like homes or businesses and can always print
more money if they have their own currency.
● According to MMT, as long as the government deficit stays within specific bounds, it
won't matter as much as previously thought.
● In a developing economy, MMT emphasizes the necessity of a growing public sector
deficit and casts doubt on the idea of "balanced public sector budgets."
● MMT highlights the potential for harnessing money creation for social and ecological
imperatives while supporting government spending up until there is full employment