Financing a Sustainable Economy in Hungary, Opportunities and Challenges: Decarbonisation, Green Transition, Sustainable Finance, Central Bank

Abstract

Today’s prolonged crisis situations, such as the Covid-19 pandemic, the Russian-Ukrainian conflict, and the energy and climate crisis call for climate neutrality in Hungary, although they make transition difficult in the short term. A number of studies suggest that Hungary will be able to reach the target by 2050 at the latest, and that the benefits, on the whole, will outweigh the macroeconomic sacrifices. Nevertheless, green transition, including the Hungarian economy, requires a huge amount of investment and financing, which makes it necessary to involve the private sector, and which central banks can assist effectively. Fortunately, a variety of solutions to finance green and sustainable investments have emerged recently, although we are still at the beginning of the process. The Central Bank of Hungary (Magyar Nemzeti Bank, MNB) has taken a number of measures – and is planning to take further ones – to promote green finance in Hungary, which, in addition to the development of a sustainable financial system will contribute to Hungary’s transition to an environmentally sustainable economy.