Central banks and financial institutions are now playing their part in promoting environmental sustainability. We incorporate a sustainability-linked monetary policy (SLMP), comprising an interest rate and a collateral constraint responding to carbon emission activity, into a New Keynesian model...

This paper seeks to understand the interplay between banks, bank regulation, sovereign default risk and central bank guarantees in a monetary union. I assume that banks can use sovereign bonds for repurchase agreements with a common central bank, and that their sovereign partially backs up any...