Taming the giant – towards a sustainable financial system

This collection of articles from the Green European Journal examines the instability of the current financial system, the risks posed by fossil fuel asset bubbles, and the need for a 'green' economic transition. It critiques the role of private bank money creation, the impact of austerity in the EU periphery, and the influence of banking lobbies on regulation, while proposing alternatives such as sovereign money, debt jubilees, and mandatory climate risk accounting for financial institutions.

• The current economic system is viewed as an obstacle to Green policy because it is blind to 'social utility' and prioritizes profit maximization over social and environmental objectives, leading to a misallocation of resources.
• A 'carbon bubble' exists because the financial valuation of fossil fuel companies is based on reserves that cannot be burned if the global temperature increase is to be limited to 2°C. Listed carbon and oil/gas companies hold reserves corresponding to 745GtCO2, which is 180GtCO2 more than the estimated 565GtCO2 budget available until 2050.
• Private banks create money 'out of nothing' through the accounting process of making loans, which the document argues fuels boom-and-bust cycles and over-indebtedness. A proposed reform is to remove this power from banks and return it to a democratically accountable state body.
• In the EU periphery, specifically Greece, Spain, Italy, and Portugal, the financial crisis led to 'enforced environmental rollback' and austerity measures that dismantled public welfare and delayed ecological transitions.
• Tax and regulatory havens contribute to financial instability by facilitating the 'shadow banking' system, allowing institutions to bypass prudential supervision and conceal risk exposures.
• EU financial reforms since 2008, including the CRDIV package and the Bank Recovery and Resolution Directive (BRRD), are described as incomplete and full of loopholes due to intense industry lobbying and the desire of Member States to protect national 'banking champions'.
• The document suggests that the European Union should make it mandatory for banks and credit institutions to account for their exposure to climate risks, including the use of mandatory stress tests to evaluate how investments are affected by increased fuel and emission prices.
• To finance a green industrial transformation, the document proposes leveraging private financing through local bond markets, crowdfunding for energy efficiency, and 'private-private partnerships' between pension funds and banks.

APA

Green European Journal (2014). Taming the giant – towards a sustainable financial system. https://www.greeneuropeanjournal.eu/wp-content/uploads/2016/11/GEJ_Vol7.pdf

Chicago

Green European Journal. Taming the giant – towards a sustainable financial system. 2014. https://www.greeneuropeanjournal.eu/wp-content/uploads/2016/11/GEJ_Vol7.pdf.

Wikipedia

{{cite report |author=Green European Journal |title=Taming the giant – towards a sustainable financial system |date=January 2014 |url=https://www.greeneuropeanjournal.eu/wp-content/uploads/2016/11/GEJ_Vol7.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greeneuropeanjournal2014taming, author = {{Green European Journal}}, title = {{Taming the giant – towards a sustainable financial system}}, institution = {Green European Journal}, year = {2014}, month = jan, url = {https://www.greeneuropeanjournal.eu/wp-content/uploads/2016/11/GEJ_Vol7.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }