Policy Lever: Upgrading Governance
ExamplesKey measures that could be taken include:
- Principles: Adopting principles for a sustainable financial system to guide policymaking.
- Policy & Legal Frameworks: Considering impacts on sustainability when developing and reviewing financial regulations, financial sector development plans, and legal frameworks.
- Roadmaps and plans: Developing long-term national strategies and roadmaps, supported by coordination mechanisms.
- Regulatory Mandates: Exploring the impact of sustainability factors for existing mandates of central banks and financial regulators and adjust where necessary.
- Performance Measurement: Developing a performance framework to assess and guide progress in developing sustainable financial systems.
ImpactThis is the area where there is least common current practice, but strong potential.
This paper investigates various roles that finance ministries can assume to promote those policies, regulations and standards which help to create a sustainable financial system. Finance ministries typically interact with the financial sector in many ways, from regulator and supervisory mandate setters to tax authority and sovereign debt issuers. All of these points of leverage
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The paper also shows how the objectives of financial policy-makers—such as investor protection, transparency, maintaining the safety and soundness of financial firms, financial stability, tackling systemic risk, reducing information asymmetries, tacking market failures and developmental objectives— offer multiple avenues to legitimize policy measures that can contribute to the greening of the financial system. In particular,