Template-Type: ReDIF-Paper 1.0
Author-Name: Eric Jondeau
Author-X-Name-First: Eric
Author-X-Name-Last: Jondeau
Author-Name: Benoit Mojon
Author-X-Name-First: Benoit
Author-X-Name-Last: Mojon
Author-Name: Cyril Monnet
Author-X-Name-First: Cyril
Author-X-Name-Last: Monnet
Title: Greening (runnable) brown assets with a liquidity backstop
Abstract: The momentum toward greening the economy implies transition risks that are new threats to financial stability. In particular, the expectation that other investors may exclude high carbon corporate emitters from their portfolio creates a risk of runs on brown assets. We show that runs can be contained by a liquidity backstop with an access fee that is based on the firm's carbon intensity, while the interest rate on the liquidity lent through this facility is independent from its carbon intensity.
Length: 46 pages
Creation-Date: 2021-03
File-URL: https://www.bis.org/publ/work929.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work929.htm
File-Format: text/html
Number: 929
Keywords: green finance, financial stability, bank runs, brown assets, liquidity provision
Classification-JEL: G01, G18, G28
Handle: RePEc:bis:biswps:929