Over the last years, China has made substantial progress in greening its financial system. This has been carried out through a top-down governance model where political ambitions and commitments have been effectively translated into concrete policies and changes on the ground. The article accounts for how innovation has been a key component of these efforts across three aspects. First, at the central bank level, China has deployed innovative tools not seen anywhere before, such as including green factors in macroprudential regulation. Second, fintech has been applied in innovative ways, such as by banks using public environmental platforms as input for client credit assessment. Third, China has used green finance policies in various ways in different provinces as pilots and experiments before rolling out policies at the national level. From an EU perspective, the article finds that Chinese green finance efforts open the door for collaboration in terms of participation in each other’s financial markets, joint efforts in third countries, as well as coordination of Covid-19 recovery efforts.
- Green finance
- Financial innovation