Assessing the role of central banks in addressing financial sector carbon emissions

The independence of the Federal Reserve, long an article of faith among lawmakers, is under attack. From the attempted removal of a member of the Board of Governors to an Executive Order subjecting the Federal Reserve's regulatory and supervisory actions to executive oversight, both the formal legal architecture and informal political norms that have long insulated the central bank from presidential control are being challenged in unprecedented ways. Amidst growing calls to reevaluate the Federal Reserve's mandate and strip the central bank of its regulatory and supervisory authority, recovering the neglected history of the Federal Reserve's role as a regulator and supervisor could not be timelier. Utilizing archival sources, this Article provides a comprehensive account of the dramatic, yet largely accidental, expansion of the Federal Reserve's regulatory and supervisory power over the course of the twentieth century. As the Article argues, the rise of the bank holding company, a corporation created to acquire and hold the stock of banks and other financial entities, as the dominant organizational structure of modern American finance unexpectedly transformed the Federal Reserve into the regulator-in-chief of the American financial system. Ultimately, retracing the Federal Reserve's inadvertent path to regulatory supremacy, and the efforts to reconfigure that arrangement over the twentieth century, serves as a critical reminder of the roads not traveled and opens up new possibilities in a key moment of reform.

ABSTRACT This study examines connectedness between the US–China tension (UCT) index and precious metal returns (silver, gold, platinum, palladium, rhodium) in US and China markets using a frequency-based TVP approach. Cross-spillovers account for about 48.5% of system variation, indicating moderate, short-term-dominated interdependence. Precious metals show safe-haven behavior to UCT shocks, strongest for rhodium. UCT is a net shock transmitter; platinum dominates short-term transmission, while palladium switches roles across horizons. Connectedness surges during global shocks, amplified by joint geopolitical and policy uncertainty. These results suggest that investors can exploit rhodium’s resilience, while traders and central banks should pursue flexible, time-varying diversification strategies across geopolitical regimes.

Purpose This study aims to investigate the key factors influencing central bank digital currency (CBDC) adoption by conducting a meta-analysis of scholarly literature. It introduces a novel keyword-network analysis framework using bibliometric metadata from the Web of Science and Scopus databases, validated through artificial intelligence (AI)-based topic modeling. Design/methodology/approach Grounded in the unified theory of acceptance and use of technology (UTAUT) framework, this study identifies core and extended constructs related to CBDC adoption. It applies VOSviewer for keyword co-occurrence analysis on the bibliometric metadata and proposes a new method to calculate the relative importance of adoption factors based on link strength. This study also reveals dominant themes refined and validated through advanced AI-based topic modeling, signifying research trends on CBDC-adoption literature. Findings This study reveals dominant research themes, identified from topic keywords, demonstrating the breadth and depth of CBDC-adoption research and research trends on CBDC-adoption literature. Network-based weight calculations prioritized key adoption constructs such as performance expectancy, effort expectancy, social influence, usefulness, awareness, financial literacy, acceptance, behavior, intention, attitude, adoption intention and regulation, offering a structured understanding of CBDC-adoption dynamics. Practical implications The findings provide valuable insights for policymakers, regulators and financial institutions by highlighting the critical variables that drive or hinder CBDC adoption. The proposed bibliometric-AI hybrid methodology offers a replicable model for future digital currency and FinTech adoption studies. Originality/value This research pioneers a bibliometric and AI-integrated methodology to classify CBDC-adoption factors systematically. It extends the literature by linking thematic clusters to adoption constructs using quantitative co-occurrence analysis and advanced topic modeling.

Indonesia’s financial system is bank-centric, with banks managing approximately 78% of the nation’s financial assets; therefore, the effectiveness of monetary policy transmission depends on banks’ responsiveness to the central bank’s interest rate policy (the BI Rate). However, a policy-relevant anomaly persists: deposit rate pricing is more strongly anchored to the Deposit Insurance benchmark (IDIC Rate) than to the BI Rate. This study argues that this research is significant because it identifies a “Dual Benchmark System” that traditional single-anchor models fail to address, representing a critical friction in emerging market transmission. This study examines this dual-benchmark paradigm and the associated asymmetric risks using a panel VAR with a Generalized Impulse Response Function (GIRF) on quarterly data for 63 commercial banks from 2010 to 2024. The results indicate that IDIC Rate shocks have a larger and more persistent effect on deposit rates than BI Rate shocks, generating asymmetric transmission risks. This dominance creates a structural “price ceiling” that keeps funding costs high, ultimately raising lending rates for borrowers and distorting deposit growth rates. Furthermore, this analysis reveals that external policy signals are far more influential than internal financial performance. This suggests that under the Basel III framework and prevailing financial regulations, banks prioritize liquidity compliance and safety net protection over internal operational efficiency. Macroeconomic shocks remain weaker than policy shocks and dissipate more quickly. This finding reveals a potential systemic coordination risk, implying an urgent need for tighter policy coordination between the Central Bank and the IDIC to reduce structural frictions, maintain transmission effectiveness, and protect long-term financial stability.

Purpose: to examine the dependence of households' inflation expectations on the values of observed and actual inflation, as well as the key rate of the Central Bank of Russia and its inertia. Methods: the main tool in the article is econometric analysis. The least squares method is used to test the level of dependence of inflation expectations on indicators of actual inflation, observed inflation, and the key rate of the Central Bank of Russia for the period 2014-2025. The source for the simulation is statistical data from the Central Bank of Russia. The assessment of the inertia of inflation expectations, i.e. their dependence on previous values, was carried out using an autoregressive model with lags. Results : the results obtained indicate that Russian inflation expectations are close to irrational ones. The indicators of observed and actual inflation have a significant impact on their formation. The current key rate has a weak impact. The lagged autoregressive model shows a high dependence of Russian inflation expectations on previous values, indicating the adaptive nature of these expectations. However, the farther back in time the previous results are, the less impact they have on the respondents' current assessment. Conclusions and Relevance : the average and median values of Russian inflation expectations are about twice as high as the corresponding official inflation indicators, and there is a moderate positive correlation between these two variables. The dependence of inflation expectations on the key interest rate remains weak, which indicates the irrational nature of Russian households' inflation expectations. Due to this weak relationship, tightening monetary policy through high interest rates does not have significant impact on household inflation expectations, so the effectiveness of the monetary policy interest rate channel should be compensated for by active communication from monetary and fiscal authorities.

Objective: The study examined the effect of deposit insurance on lending behaviour of quoted Deposit Money Banks (DMBs) in Nigeria from 2015-2023. Deposit insurance was proxied by capital adequacy ratio (CAR) and premium rates while lending behavior was proxied by loan-to-deposit ratio. Theoretical Framework: The study was underpinned by the Hands-on theory of deposit insurance. Deposit insurance is supposed to contribute to the maintenance of banking system stability as one of the safety net arrangements. Method: The data was sourced from the individual audited financial reports of the listed DMBs in Nigeria. The study adopted the census approach, in which all the fourteen (14) listed DMBs in Nigeria were involved. Regression model was employed to estimate the relationship between deposit insurance and lending behaviour of listed DMBs in Nigeria. Results and Discussion: The results revealed that CAR had a positive significant effect on loan-to-deposit ratio of listed DMBs in Nigeria. While premium rates had insignificant effect on loan-to-deposit ratio of listed DMBs in Nigeria. Implications of the Research: The study recommended that the Central Bank of Nigeria should maintain and refine capital adequacy requirements in ways that encourage healthy capital buffers without restricting credit growth. Originality/Value: Measures such as countercyclical capital buffers and enhanced stress testing should be integrated to ensure resilience across economic cycles. Also, since the deposit insurance premium rate is risk based, the Nigeria Deposit Insurance Corporation should deepen the implementation of the methodology by assigning a higher weight to capital adequacy. Allowing greater variation in premium rates based on risk profiles will improve incentives for prudence, help reduce latent moral hazard, and improve the effectiveness of deposit insurance as a safety net mechanism within the financial system.

Purpose This study aims to examine how Brazil’s regulatory framework for open finance – initially designed to promote financial inclusion through competition – can evolve to integrate broader environmental and social objectives. Design/methodology/approach It used a qualitative approach, drawing on thematic analysis of semi-structured interviews with key stakeholders in Brazil’s open-finance ecosystem. Insights inform a middle-range theory for sustainable open-finance implementation, supported by an adapted impact value chain framework. Findings The Brazilian Central Bank (BACEN) has advanced inclusive finance innovation, yet environmental objectives remain marginal in open-finance implementation. The study identifies three potential pathways for embedding sustainability into open finance: “policy for sustainability”, “reducing risks” and “national and international collaboration”. Practical implications The findings offer insights for regulators, particularly BACEN, to reorient open-finance implementation toward sustainability and support Brazil’s inclusive and climate-resilient development agenda. Originality/value This paper contributes to emerging literature on sustainable open finance by combining stakeholder insights with recent policy developments to propose a conceptual model linking open finance with environmental and social objectives.

In the context of digital transformation in the banking sector, landing pages have become essential communication channels for brand interaction with business audiences. However, little research has explored how different types of banks — traditional and digital-only (neobanks), Russian and international — use multimodal elements (text, imagery, and layout) on their landing pages to construct brand positioning in the B2B segment. This study aims to identify and compare positioning signals on landing pages targeting small and medium-sized business clients. The methodology draws on Emmanuel Mogaji’s signal-based positioning model and the multimodal social semiotic discourse framework developed by Gunther Kress and Theo van Leeuwen. The analysis of 24 bank landing pages reveals that traditional banks emphasize institutional stability, experience, and signals of values and origins through national or industry-specific affiliations. In contrast, neobanks highlight technological advancement, accessibility, and emotional closeness while avoiding explicit national-cultural identification. Russian banks more frequently rely on state-related trust signals — such as central bank licenses and participation in federal programs—whereas international banks focus on social proof, including customer testimonials, third-party ratings, and global branding strategies. The findings contribute to the fields of digital marketing, branding, and multimodal discourse studies, offering practical insights for professionals working with financial interfaces in business communication.

Purpose: Financial performance ensures deposit taking microfinance institutions operations are sustainable and reach financially marginalized groups in Kenya. Earnings quality is used to measure financial performance of deposit taking microfinance institutions in Kenya as it helps in identifying both strength and weaknesses in financial management and make sure that these institutions are in a position to handle unexpected losses and sustained financial performance. However, deposit taking microfinance institutions in Kenya have been experiencing fluctuating financial performance. This trend may consequently lead to failure of these institutions to raise minimum capital requirement by the Central Bank of Kenya as well as raise ROE. This research sought to establish the effect of earning quality and financial performance of deposit taking micro finance institutions in Kenya. Methodology: Descriptive research design was adopted by the research. A sample of eight out of a total of fourteen licensed deposit taking MFIs by CBK were used during this pilot research. Secondary data was collected using structured data sheet. This study relied on panel data. The linear relationship was modeled using multiple regression models. Data analysis was performed to sum up quantitative data, using measures of dispersion like mean, median and mode. STATA version 16 was used to perform the analysis, with relevant content presented in figures and tables. Findings: Findings show only earning quality has a statistically significant effect on financial performance with p value of 0.000. Unique Contribution to Theory, Practice and Policy: The study used earning theory to explain study objective. The study recommended DTMFIs to prioritize improving earning to improve ROE.

The U.S. dollar’s share in global central banks’ foreign reserves has declined by slightly over 1.5% between 2015 and 2025. When gold is included as foreign reserves, the decline is significantly larger, 12%. We find that the average USD share in total reserves declines by 12 percent, while the gold share increases by 8 percent and other reserve assets by 4 percent. The rise in the share of gold is primarily explained by gold price appreciation. In the case of sanctioned Russia, appreciation is 78%, while physical gold accumulation accounts for 22% of the increase in the value of gold reserves. In China, 91% of the increase in the share of gold is due to gold appreciation, while only 9% is due to gold accumulation. In India, the respective proportions of active versus passive accumulation were 80% and 20%, while in Japan they were 96% and 4% respectively. Physical gold accumulation took place in China (538 metric tons), Russia (915 mt), India (322 mt) and Japan (81 mt). For Germany, France, Italy, Spain, England, and Switzerland, 100% of the share of gold reserves took place passively due to gold appreciation, with no change in physical gold held. Reserve de-dollarization takes place in all ten countries, except for Switzerland, whose USD assets rose by 2% of total reserves. In most cases, de-dollarization reflects valuation effects rather than substantial reductions in dollar asset holdings.

ABSTRACT This study investigates the predictive power of the term spread for forecasting economic activity across both conventional and unconventional monetary policy regimes. Utilizing data from 22 OECD countries spanning the period from 1985Q1 to 2024Q2, the analysis reveals that the term spread generally maintains its ability to predict GDP growth during periods of conventional monetary policy. Conversely, under unconventional monetary policy conditions, characterized by central bank policy rates anchored at the zero lower bound, the predictive power of the term spread diminishes substantially, remaining statistically significant in only a limited subset of countries. By contrast, stock returns emerge as a more robust explanatory variable for GDP growth across a broader set of economies under these conditions. These findings suggest that the term spread—historically regarded as one of the most reliable predictors of future economic activity since the late 1980s—may no longer serve as the most effective forecasting tool amid evolving monetary policy frameworks.

This paper examines the European Central Bank’s (ECB) monetary policy response to elevated inflation and geopolitical uncertainty during the period 2022–2025. In the aftermath of the COVID-19 pandemic and Russia’s invasion of Ukraine, euro-area inflation reached multi-decade highs, posing serious challenges to price stability and financial market confidence. The study analyzes the ECB’s key policy measures, including rapid interest rate increases, adjustments to asset purchase programs, and the deployment of new policy tools aimed at stabilizing markets and anchoring inflation expectations. Using macroeconomic data and policy analysis, the paper evaluates whether these measures were effective in containing inflation without triggering financial instability. The findings highlight the trade-offs faced by central banks during overlapping economic shocks and provide policy-relevant lessons for future crisis management.

This short article discusses the economic background under which the Quantitative Easing (QE) policies have been initiated by the major central banks of the advance countries in the world. The QE was initiated by the major central banks because the conventional ‘inflation targeting policy through short term interest rates policies were found to be ineffective in fighting the recession of the years 2008-2009, as the short term interest rates had already reached a floor and the central banks could not reduce the rates further down. This might have been due to the ‘Keynesian Liquidity trap’. Then the central banks resorted to buying the long-term assets such as the bonds, the mortgage securities and selling or pumping the money to the public, financial institutions and the households. We have discussed the operation and working of these QE policies in the USA, the U.K, Europe, and Japan. We have also evaluated the effectiveness of the QE policies in those major countries and economies. Our assessment has been by and large very positive about the QE policies; however, there have been some distributional effects, which have reduced the intended effectiveness of the QE policies in those countries. Further, the conventional money supply, either the narrow money, M1, or the broad money supply, M3, are found to be empirically very important to judge the effectiveness of the monetary policy especially during the recessions of 2008-2009.

Central banks across the world have remained in a state of emergency ever since the global financial crisis [...]

This paper attempts to provide an overview of the digitization of Malaysia’s financial ecosystem which began in the 1990s during the time of the “Asian Miracle.” Since then, the nation has weathered several financial storms to survive and thrive through prudence as well as the constant upgrading of its regulatory frameworks and keeping up with technology and innovation. In 2022, Malaysia collaborated with the Bank of International Settlements (BIS) to trial wholesale Central Bank Digital Currencies (CBDCs) together with three other participating central banks under Project Dunbar. In 2025, Malaysia undertook its own initiative under Project Mawar in partnership with BIS to develop its own CBDCs. Malaysia’s desire to digitize its financial ecosystem is not driven by dedollarization but by the fear of not wanting to be left behind technologically. This paper outlines how Malaysian regulators see the benefits as well as the challenges ahead for this small nation. Given that Malaysia has its own national priorities to consider while seeing an opportunity to be a forerunner in Islamic digital financing, will it be in a rush to do things the ASEAN Way? Past experiences and how it sees the future may play a role in the pace Malaysia chooses to take.

Ukrainian domestic government bonds account for more than 85% of stock market turnover, yet institutional investors lack formalized frameworks for incorporating macroeconomic forecasts into portfolio decisions. War-induced volatility amplifies interest rate and currency risks. Existing Ukrainian research addresses these issues fragmentarily: either correlating macro factors with yields without portfolio optimization or optimizing portfolios using current yields without forecasting macro-driven changes. No prior work integrates the complete chain from scenarios to optimal weights. This study addresses how macroeconomic forecasts of the National Bank of Ukraine can substitute for unstable VAR models in yield prediction, what is the monetary transmission coefficient under structural breaks, and how currency diversification between hryvnia and dollar bonds should be optimized when exchange rate scenarios diverge while accounting for repricing effects. Methodologically, the framework implements two-stage approach. First stage models National Bank of Ukraine key rate as function of inflation and unemployment using central bank forecasts. Second stage links policy rate to domestic government bonds yields via parsimonious regression with crisis interaction. Portfolio optimization maximizes Sharpe ratio incorporating repricing through modified duration. Covariance matrix applies shrinkage to stabilize parameters. Key contribution is the first systematic mechanism for Ukrainian domestic government bonds market that operationalizes macro forecasts into rebalancing decisions. Unlike fragmented approaches, it delivers endto-end algorithm: from quarterly NBU forecasts through monetary transmission to optimal weights with explicit currency exposure and duration management. For institutional investors facing regulatory diversification requirements, this provides formal alternative to discretionary or naive strategies. Framework demonstrates how forward-looking macro information can be systematically incorporated into portfolio management in volatile emerging markets.

This article examines the strategic trajectory of dedollarization led by BRICS nations and the role of financial innovation in reimagining global monetary sovereignty in a multipolar world. While significant work has documented the rise of alternative currencies and payment systems, the strategic and institutional dimensions of BRICS-led statecraft remain under-explored. Drawing on a robust corpus of qualitative secondary data spanning 2010–2025, this study employs a novel, integrated framework that links strategic state motivations, institutional architecture, and technological enablers. Using comparative financial system mapping and thematic document analysis, we trace how BRICS has operationalized dedollarization via instruments such as local-currency trade, currency swaps, and central bank digital currencies (CBDCs). Our findings suggest that while the US dollar remains as dominant currency globally, BRICS initiatives are producing significant, albeit incremental, shifts in global finance. We identify a dual dynamic of territorial diversification, where intra-bloc trade and lending increasingly utilize non-USD currencies, and functional innovation, where new digital payment platforms and CBDCs enable alternative payment rails. For example, the share of RMB in global payment systems has measurably increased from ~2% in 2019 to a peak of nearly 4.6% in late 2024, and over 90% of Russia-China bilateral trade is now settled in local currencies. This growth, however, has fluctuated, with recent reports indicating the share at ~3.5% in April 2025. The paper contributes a nuanced framework that offers clear foresight into how these BRICS actions may incrementally reshape the international monetary and financial system (IMFS), suggesting a gradual restructuring rather than a sudden rupture of dollar hegemony.

Unauthorized use of third-party bank accounts as loan collateral represents an emerging but under-examined form of financial crime in developing banking systems. This study examines the unauthorized use of third-party bank accounts as loan collateral in Nigeria and its implications for fraud risk management and consumer protection. The research aims to identify the mechanisms through which unauthorized collateralization occurs, assess the adequacy of customer consent verification and internal control systems, evaluate the effectiveness of existing regulatory safeguards, and propose risk mitigation strategies. A descriptive research design was adopted using primary data collected from 200 respondents (120 bank staff and 80 customers) through structured questionnaires and interviews. Secondary data were obtained from regulatory documents, including the Central Bank of Nigeria (CBN) Consumer Protection Framework and BOFIA 2020. Data were analyzed using descriptive statistics and multiple regression analysis at a 5% significance level. Findings reveal that weak customer authentication significantly increases unauthorized collateralization risk by over 60%, (β = 0.61, p < 0.01), while ineffective internal controls also exert a positive and significant influence by nearly 50%. (β = 0.48, p < 0.05). Although BVN-based authentication reduces risk exposure by approximately 37%, (β = –0.37, p < 0.05), it remains insufficient in the absence of integrated monitoring and real-time customer notification mechanisms. The model explains 63% of the variation in unauthorized collateral use, confirming the systemic nature of the problem. The study concludes that unauthorized collateralization is primarily a process-driven institutional failure rather than an isolated criminal act. It recommends mandatory biometric consent verification, real-time customer notifications, strengthened internal audit controls, and targeted regulatory enforcement to enhance fraud prevention and restore consumer trust in Nigeria’s banking system.

Central banks have a primary goal of price stability. They pursue it using tools that include the interest they pay on reserves, the size and the composition of their balance sheet, and the dividends they distribute to the fiscal authority. We describe the economic theories that justify the central bank’s ability to control inflation and discuss their relative effectiveness in light of the historical record. We present alternative approaches as consistent with each other, as opposed to conflicting ideological camps. While interest-rate setting may often be superior, having both a monetarist pillar and fiscal support is essential, and at times pegging the exchange rate or monetizing the debt is inevitable. (JEL E31, E43, E52, E58, E62, F31, G21)