In recent years, green finance has emerged as a commonly used strategy for dealing with environmental problems. However, it still remains to be seen whether green finance deals effectively with current global environmental problems. More recently, proposals regarding greening monetary policy have emerged. The goal of this paper is to provide a conceptual framework that helps to distinguish between different forms of green finance and monetary policy. We systematically analyse forms, tools and measures of green finance and monetary policy against different theoretical backgrounds. In so doing, we fill a research gap by providing an appropriate classification that is intended to facilitate future academic research. We provide different categories and distinguish, on an abstract level, between neoliberal, reformist and progressive forms of green finance. Furthermore, we provide sub-categories on a more concrete level of abstraction. With this, we focus on both financial market regulation and monetary policy strategies. Against the background of our categorisation, the different focuses on green finance and green monetary policy and the (often implicitly) underlying theoretical assumptions become transparent. The classification has significant implications for the evaluation of different perspectives and is, therefore, important for academic debate. The classification also potentially represents a basis for policy related discussions. We conclude that neoliberal forms of green finance and monetary policy that rely on the assumption of the effectiveness of markets for contributing to sustainability tend to neglect or abstract from potentially adverse distributional effects. Reformist forms of green finance and monetary policy are more skeptical of the effectiveness of market processes and, therefore, consider a greater role for government policies. In addition, reformist approaches are more concerned about the potentially adverse distributional effects of environmental policies. Finally, progressive green finance and monetary policy adopts a more global perspective on environmental issues and links the discussion intrinsically with questions of global inequality and socio-ecological transformation. Moreover, progressive approaches are skeptical of global capitalism at a systemic level and therefore demand global rules and financial and monetary regimes that allow for solutions of environmental problems based on global solidarity and a democratic economic governance.

The paper presents an alternative approach to measuring systemic illiquidity applicable to countries with frontier and emerging financial markets, where other existing methods are not applicable. We develop a novel Systemic Illiquidity Noise (SIN)-based measure, using the Nelson–Siegel–Svensson methodology in which we utilize the curve-fitting error as an indicator of financial system illiquidity. We empirically apply our method to a set of 10 divergent Central and Eastern Europe countries—Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia—in the period of 2006–2020. The results show three periods of increased risk in the sample period: the global financial crisis, the European public debt crisis, and the COVID-19 pandemic. They also allow us to identify three divergent sets of countries with different systemic liquidity risk characteristics. The analysis also illustrates the impact of the introduction of the euro on systemic illiquidity risk. The proposed methodology may be of consequence for financial system regulators and macroprudential bodies: it allows for contemporaneous monitoring of discussed risk at a minimal cost using well-known models and easily accessible data.

Greater globalisation and an increasing role of financial markets have a significant impact on the banking industry and the operational risk management (ORM) process. The Basel Committee on Banking Supervision (BCBS) started to underline the importance of operational risk category and the capital requirements for the losses connected with operational risk (Basel II). Last financial crisis, which had enormous impact on financial markets caused the implementation of Basel III norms concerning regulatory capital requirements. The aim of this paper is to compare and assess different approaches for modelling an operational risk: the basic indicator approach (BIA) and the standardised approach (TSA), including its variant - the alternative standardised approach (ASA). The novelty of our approach lies in the critical analysis of these approaches from the viewpoint of capital measurement for operational risk.

The chapter starts with an overview of global environmental problems and asks whether green finance can address them. In order to do so, the chapter provides a brief history of green finance and presents a framework for understanding different approaches to green finance. Based on the expected mechanisms and underlying theories, the scope and the goals of green financial strategies and green central bank policies, we distinguish between neoliberal, reformist, and transformative-progressive forms of green finance. Whilst neoliberal forms of green finance assume commensurability and the idea that market-based mechanisms will solve environmental problems, reformist perspectives are sceptical and demand strict regulations and government policies. In so doing, reformist measures are likely to contribute to green growth. Transformative-progressive perspectives on green finance go beyond reformist approaches and support a socio-ecological transformation of the mode of production that aims at allowing equal access for all to the use of nature without destroying the ecological foundations of the planet. Based on this framework the chapter introduces the contributions in the book.

The chapter summarises important findings from the contributions of the book. Based on these findings, and applying the distinction between neoliberal, reformist and transformative-progressive forms of green finance, we discuss the future of finance and its likely impact on the environment. We refer to two scenarios developed in a recent Report to the Club of Rome that discusses two opposing ways of dealing with the threat of a climate catastrophe: firstly, “Too little, too late”, and secondly “The great leap”. Under the assumption that neoliberal forms of green finance continue to predominate, it is concluded that they will contribute to the first scenario. The implications of assuming the rise of reformist forms of green finance are not completely clear. Whether they will feed into the second scenario depends on the specific configuration and the speed under which these measures are undertaken. Although they have not yet gained wide acceptance, implementing transformative-progressive strategies certainly contributes to a socio-ecological transformation and supports the realisation of the second scenario. It is political processes that will determine which form of green finance will prevail, and hence, what will be the future of our planet.