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Money printing to mitigate climate change

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Money printing to mitigate climate change

Publicada em: Economia e finanças
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Money printing to mitigate climate change

  1. 1. How Much Money to be Printed to mitigate the Climate Change ? Estimated $1 trillion per year to stay below a global temperature rise of 2C.
  2. 2. USDProject.com Content Created by
  3. 3. United Nations (UN) member states signed the latest climate agreement, The Paris Agreement, in 2015; which set an international target to limit average global warming to two degrees celsius above pre-industrial temperatures.
  4. 4. An important question then arises: how do we achieve this, and how much will it cost to keep global warming below the two degree target?
  5. 5. An estimation made on 2017 by the UN itself shows $1 trillion per year will be required to stay below the targeted global temperature rise of 2C.
  6. 6. Where does the money come from? Collecting more national debt might be the only way to meet this financing needed to reach the goal of global warming. Quantitative easing or simply creating new money might just be the answer.
  7. 7. How much does it costs to the economy? An estimation of ourworldindata gives a surprising costs to be incurred in mitigating the impacts of climate change. The estimated total global economic cost would be €200-350 billion per year by 2030, less than 1% of the global GDP.
  8. 8. What if the target is 1.5 C ? To stay below a temperature rise of 1.5C (zero emissions by 2050), we need to scale up and accelerate the move towards 100% renewable energy. A rough – and unofficial – estimate says this will need annual investment of $1.5 to $2tn.
  9. 9. What if the target is 1.5 C ? Another unofficial estimate shows that the upfront annual capital investment needed to reach zero emission (by 2050) would be €530 billion by 2020 and €810 billion by 2030. These figures would greatly exceed in mitigation strategies.
  10. 10. The role of central banks Since the beginning of the financial crisis 2008, FED have created trillions dollar to stabilise the global financial system. Many private sector banks and financial institutions were bailed out by buying up private and public bonds worth billions.
  11. 11. The role of central banks The European Central Bank (ECB) is still buying assets with newly created money of €60bn per month to stimulate the economy in the eurozone and prevent deflation.
  12. 12. How long the money printing lasts? This is possible unless the central banks become insolvent since they have got monopoly on their own currency to issue (print) the money as as legal tender.
  13. 13. How long the money printing lasts? The central banks would again buying bonds with newly created money to finance the climate change. Some have already proposed green climate bonds, which would be issued by the Green Climate Fund (GCF).
  14. 14. What does money printing do? Economists rarely talk about money printing as printing of physical currency. Money printing more importantly provide convenient physical tokens for transferring assets between balance sheets, helping these to be inflated.
  15. 15. Results is Inflation & Money Illusion Current (2018) worth of US household assets is about $103 trillion whereas the physical money printed worths about $300 billion. Message here is clear that a small amount money printing inflates the balance sheet by its multiple through Money Illusion.
  16. 16. For more information, USDProject.com find us at