Greening Monetary Policy: To Expand or Restrain? The Legal and Normative Implications of the Federal Reserve Combating Climate Change

Authors

Jason D. D'Andrea

First Page

1

Document Type

Article

Abstract

The U.S. Federal Reserve is increasingly at the center of political and scholarly debates concerning how to address climate change. This new pressure comes as other central banks have recently considered an array of regulatory, supervisory, and monetary policy tools to mitigate climate change. Yet, in contrast to some of its global counterparts, the Federal Reserve has been more tailored in its response.

The desire to proactively combat climate change with central bank tools has generated a spectrum of policy designs and legal wrangling. Focusing on the Federal Reserve’s monetary policy mandate, this Article undertakes a comprehensive analysis of the legal and policy arguments both for and against Federal Reserve intervention in climate change. Specifically, it synthesizes these arguments into two sides: “restrainers” and “expanders.” The legal groundings of each side originate from broad and narrow approaches to statutory interpretation—specifically, the Federal Reserve Act and other pertinent statutes affecting the Federal Reserve’s purpose and ability to conduct monetary policy.

In analyzing these arguments, this Article considers the significance of the Federal Reserve’s legitimacy—analyzing whether the Nation’s central bank can offensively act on climate change and stay within its legal boundaries set by Congress. This Article then weighs these arguments and the Federal Reserve’s underlying legitimacy against normative factors—such as federal agency independence and political polarization.

Ultimately, this Article suggests that given the serious risk of further diminishing the Federal Reserve’s credibility—seen recently with other independent and unelected institutions like the U.S. Supreme Court—the Federal Reserve should remain as apolitical as possible.

Recommended Citation

Jason D. D'Andrea, Greening Monetary Policy: To Expand or Restrain? The Legal and Normative Implications of the Federal Reserve Combating Climate Change, 30 Buff. Envtl. L.J. 1 (2024).
Available at: https://digitalcommons.law.buffalo.edu/belj/vol30/iss1/1