Green monetary policy and the scope of the ECB’s mandate: maintaining the right (institutional) balance

The European Central Bank's (ECB) commitment to adjusting monetary policy to the EU's climate goals raises novel questions about the scope of its mandate and institutional balance. Article 127(1) TFEU defines the ECB's overarching objectives in open-ended terms: ensuring price stability and, secondarily, supporting the general economic policies in the EU. This Chapter assesses how the ECB reinterpreted these objectives to design the most concrete "green" monetary policy measure to date-the decarbonisation of its corporate holdings under Decision (EU) 2022/1613. Under the Decision, the ECB innovatively reconfigured part of its operations to steer financial markets toward sustainable finance. While institutionally empowering, the Decision also incorporates self-restraining choices that prevent the ECB from encroaching on the EU legislator's prerogative to set climate policy. Only by making green monetary policy contingent on the EU legislator's measures, the Chapter argues, can the ECB remain aligned with its objectives and respect institutional balance.