Need a carrot and a big stick, Central Bank Governor Yi Gang: Tools to achieve the "3060" target | Loans | Governor
At the 14th Lujiazui Forum held today, Yi Gang, the President of the People's Bank of China, believed that achieving the "3060" goal requires a carrot and a stick. The significant increase in carbon emission costs can be understood as a big stick, while moderate increase is a medium stick or small stick, and the support tool established by the People's Bank of China is a carrot in the incentive mechanism.
In 2021, the People's Bank of China established two monetary policy tools: carbon reduction support tools and special re loans to support the clean and efficient utilization of coal, to support the development of key areas of carbon reduction. For carbon reduction loans issued by financial institutions to key areas, the People's Bank of China provides re loan funding support at a rate of 60% of the loan principal, with an interest rate of 1.75%, accurately reaching green and low-carbon projects. The re loan provided by the People's Bank of China to financial institutions must be recovered upon maturity, and financial institutions issuing carbon reduction loans to enterprises are at their own risk. This "carrot" incentive mechanism is moderate and market-oriented.
At the same time, financial institutions supported by the People's Bank of China promise to disclose information on the balance, interest rates, and carbon reduction effects of carbon reduction loans to the public, and accept verification and social supervision from third-party independent institutions. As of the end of April 2023, the balance of carbon reduction support tools has reached nearly 400 billion yuan, supporting financial institutions to issue loans of approximately 670 billion yuan, driving carbon reduction of over 150 million tons, and achieving good results.