The Effect of Monetary Policy on the Implementation of Green Economy in the Banking Sector: A Case Study in Indonesia

Abstract

The implementation of a green economy in the Indonesian banking sector is a complex challenge. With the increasing awareness of climate change, banking must adapt to more sustainable practices. Effective monetary policy can play an important role in motivating banks to invest in green projects. This research aims to explore the effects of monetary policy on the implementation of a green economy in Indonesia's banking sector. By using a mixed method approach, this research will integrate quantitative and qualitative analysis to provide a more comprehensive picture of the dynamics at play.  How can a mixed methods approach help understand the effects of monetary policy on the implementation of a green economy in Indonesia's banking sector? What quantitative methods can be used in this study to analyze the effects of monetary policy? The results of this research can also provide recommendations for regulators and banks on how to enhance the implementation of a green economy in Indonesia. Bank Indonesia (BI) has implemented various policies to support green financing, including macroprudential liquidity policies designed to encourage banks to lend to sustainable projects. Regulators like the Financial Services Authority (OJK) also play an active role in facilitating the transition to a green economy by launching a sustainable finance roadmap and green taxonomy.