The Effectiveness of Monetary Policy Through Indonesian Green Finance
Keywords:
Monetary, Green Finance, Banking, Climate ChangeAbstract
Monetary policy controls economic growth and financial stability, the Central Bank needs to control the financial cycle pressure through green finance. The measurement in this study was carried out through the Ed Waves Index development model based on Bank Indonesia's financial report data since the green finance declaration (1980-2024). The results found that there are three types of pressure from financial activity a wave in the financial cycle that affect the monetary policy effectiveness. The first type is depressed 0.027 A economic growth occurs based on a contractionary policy reaction. The second type is depressed -0.002 A is a neutral response based on a contractionary policy reaction. The third type with pressure -0.023 A, economic stability occurs based on an expansionary policy reaction. This study provides a strong contribution to Bank Indonesia in determining an effective monetary policy as a form of anticipation of climate change pressures on changes in the financial cycle in Indonesia.
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