This session was a collaborative partnership between Middlebury College and See Change Sessions, held at Middlebury College’s Bread Loaf Campus. A unique, immersive, and generative gathering designed to actually See Change. Get it?

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Prepared & Facilitated by:

Marielena Octavio & Paul Delaney

LAB SESSION OVERVIEW

In the face of the cascading and connected crises related to climate change, global conflict, and inequity, it is not an exaggeration to say we are in the midst of a polycrisis. Central banks can play a crucial stabilizing role in the global financial system or further exacerbate these challenges. In the face of “climateflation” and “fossiflation” – that is, the costs of climate change and our dependence on fossil fuels – central banks will need to deploy innovative policy instruments to address the root cause of rising prices. The primary policy response deployed by central banks – interest rate increases – fails to address these sources of inflation, increases inequality within and between countries, and jeopardizes the green investment necessary to achieve a just green transition and secure price stability.

This session focused on defining how central banks can play this role in a just, equitable, and sustainable way. We focused on unearthing the current underlying principles underpinning the actions of central banks to identify failures and opportunities. We also developed a new shared set of principles that could drive the actions of the major central banks – such as the U.S. Federal Reserve and the European Central Bank – that are aligned with an economic system that centers people, the environment, and future generations.

RECOMMENDATIONS FOR CENTRAL BANKS TO CONSIDER

Currently, central banks are not playing their role in addressing climate change and growing inequality in a proactive or substantive enough way. Central banks tend to serve the interests of capital markets and financial elites, at the expense of people, the environment, and future generations. Participants in the lab urged central banks to enhance their roles significantly in addressing global challenges by adopting the following principles:

• Coordinated Efforts:Enhance coordination with governmental bodies to ensure that fiscal and monetary policies complement each other, aiming to reduce market concentration and increase equity depending on overarching goals.
• Post-growth Awareness: Acknowledge the limitations of continuous economic growth demands and incorporate an inter-generational perspective in policy-making, considering long-term impacts on future generations.
• Global Consciousness: Recognize and act upon the global impact of your policies. Implement actions that consciously reduce power imbalances between the Global North and the Global South, promoting a decentralized approach in global financial governance.
• Environmental Responsibility: Proactively address the impacts of climate change and ecological degradation through comprehensive policy frameworks and regulatory roles.
• Holistic Decision-Making: Adopt an intersectional approach in decision-making processes to effectively address various elements of the global polycrisis.
• Promotion of Equity: Contribute to reducing wealth inequality both within and across nations, ensuring equitable economic development.
• Adaptability: Continuously update and adapt your skillsets and data analytics to better assess and respond to new and emerging risks.
• Enhanced Accountability: Strengthen accountability mechanisms to ensure that central banks' actions are transparent and aligned with broader societal goals.