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Financing the Sustainable Development Goals

Authors
  • lagoarde-segot, thomas
Publication Date
Apr 01, 2020
Identifiers
DOI: 10.3390/su12072775
OAI: oai:mdpi.com:/2071-1050/12/7/2775/
Source
MDPI
Keywords
Language
English
License
Green
External links

Abstract

This paper contends that carving out pathways to finance the sustainable development goal (SDG) agenda entails to reconsider tacit assumptions regarding the functioning of financial systems. We first use a history of economic thought perspective to demonstrate the flaws of the loanable fund theory, which has come to underlie SDG finance strategies. We then introduce the alternative endogenous money theory using a consistent theoretical and accounting framework. This allows us to identify and discuss a set of financing mechanisms that would permit to bridge the SDG budget gap. These mechanisms include the issuing of sovereign green bonds, the modification of the European Central Bank&rsquo / s collateral framework, changes in capital adequacy ratios, a market of SDG lending certificates and the introduction of rediscounting policies. We back up the discussion with examples from economic history.

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