London, 23 July 2021
The Bank of England has confirmed that green gilts will be treated as equivalent to existing gilts and made eligible in its market operations, including its quantitative easing (QE) programme. The Chancellor announced at the Budget on 3 March 2021 the UK Government’s intention to issue a minimum of £15bn of green gilts during the financial year 2021/22.
David Barmes, Senior Economist at Positive Money, said:
“We welcome the Bank’s decision to make green gilts eligible across its operations. The Bank should now go a step further and consider actively favouring green gilts in order to support green government spending and fulfill its mandate to support the net zero transition.
“Compared to countries like France and Poland, the UK has been relatively slow to start issuing green bonds. With a huge green investment gap to fill ahead of COP26, the Bank and the Treasury should closely coordinate on how the government can rapidly expand its green spending while keeping borrowing costs low.”
Notes
- Bank of England, “Green gilt eligibility in Bank of England market operations”, 23 July 2021: https://www.bankofengland.co.uk/news/2021/july/green-gilt-eligibility-in-boe-market-operations
- Positive Money and the New Economics Foundation have published a roadmap for how the Treasury and the Bank of England can take actions to green the financial system while supporting a Build Back Better recovery: https://positivemoney.org/2021/06/encourage-green-lending-to-build-back-better-government-and-bank-of-england-told-report/
- Positive Money is a research and campaign organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org.
- For more information from Positive Money or to arrange a briefing/interview with a spokesperson, please contact press@positivemoney.org.uk or Anna Pick on 07948802104.
