We study the preferential treatment of green bonds in the central bank collateral framework
as a climate policy instrument within a DSGE model with climate and financial frictions. In the …

How does a shock to the liquidity of bank assets affect credit supply, cross-border lending,
and real activity at the firm level? We exploit that, in 2007, the European Central Bank …

Using a unique identification methodology, we provide evidence that easing collateral
requirements has economy-wide causal effects on firms' real outcomes, through increased …

Does central bank collateral policy contribute to financial market integration? We address
this question by exploiting that, in 2007, the European Central Bank replaced national …

Results Our analysis yields four main results. First, the preferential treatment of green bonds
does have a positive effect on sustainable investment. Calibrated to the euro area, a …