Research

Europe faces a large climate investment gap. To fill it, we propose the joint issuance of European climate bonds. These bonds would be funded by selling greenhouse gas emission allowances via the Emissions Trading System, extended to cover all sectors. Access to the resulting funds would be conditional on countries' performance on the implementation of climate projects. European climate bonds would meet the demand for a safe, liquid and green asset, while accelerating climate investment, and increasing its resilience to sovereign crises, as well as the greening of both investors' portfolios and monetary policy. 

This paper investigates the relationship between climate risk awareness and cryptocurrency returns. First, I exploit data on Google searches for ``climate change'' query to measure climate risk salience and show that, when public attention towards climate risk increases, so do the returns of the largest 27 cryptocurrencies. Then, in an event study setting, I look at the evolution of crypto prices around the United Nations Climate Change Conferences (COPs). I show that cryptocurrency prices increase in the days following the conferences, when climate risk awareness is arguably higher. These results suggest that, despite the negative environmental impact of crypto mining, investors may perceive cryptocurrencies as an alternative instrument where to invest in periods of heightened uncertainty due to climate risk.

This paper investigates the influence of physical and transition climate risks on European option markets. We find that physical risks do not play any role, while transition risk uncertainty increases left-tail implied volatility slope by 0.002, reflecting higher downside protection costs, and a decrease of 0.001 in the right-tail implied volatility slope, highlighting limited future upside opportunities. Climate transition risks' prominence may arise from their lower uncertainty, driven by global momentum for greener policies and commitments like net-zero targets. In contrast, physical risks' unpredictability and mitigating factors like insurance or government interventions may explain their limited market impact.

We explore the role of insurance as a financial instrument for the management of climate-related natural disasters (or acute physical risks). First, we review and critically discuss the drivers of the climate insurance protection gap (IPG) considering both its supply-side and demand-side dimensions, and we identify their driving economic mechanisms. Then, we develop a conceptual framework to understand how the IPG affects the sovereign fiscal sustainability and financial stability, and through that the availability and costs of public and private investments for climate adaptation. Building on these results, we develop a research agenda that would contribute to inform the role of public and private insurance (and reinsurance) and narrow the IPG in a fiscal and financial stability-aware way. It focuses on risk assessment, risk pricing and the political economy of adaptation. We identify (i) a proper use of science-based climate scenarios at the relevant disaggregation level, (ii) the ex-ante analysis of the macroeconomic and financial impacts of underinsurance, (iii) the analysis of the economic co-benefits of adaptation policy, and (iv) sustainable market design and governance as as key areas for future research.

This paper investigates the economic impacts of increased stringency in unilateral climate policies on international trade, using the policy change of phase III of the EU Emission Trading System (EU ETS). The transition from grandfathering to auctioning affected firms heterogeneously across sectors. By exploiting difference-in-difference method, this study analyzes trade data of Italian firms and finds no evidence of pass-through in trade prices, suggesting that firms do not shift regulatory costs to foreign customers or rely on cheaper imported inputs. The policy change is associated with an increased export volumes, particularly to extra-EU ETS countries, with no significant price adjustments. The difference among treated and control firms is higher in the probability of importing from intra- and extra-EU ETS countries and exporting to extra-EU ETS countries, suggesting evidence of offshoring (or outsourcing) behaviour.

This paper examines the role of corporate Bitcoin holdings in shaping firm-level stock returns during periods of financial and policy uncertainty. Using monthly panel data for Bitcoin-holding firms and S&P 500 constituents from 2016 to 2024, we analyze stock return responses to shocks in financial market volatility (VIX) and economic policy uncertainty (EPU). The results show that Bitcoin does not provide protection against market volatility shocks; instead, firms with Bitcoin exposure experience greater losses following increases in the VIX. However, during periods of elevated policy uncertainty, Bitcoin-holding firms outperform their peers, suggesting that investors view Bitcoin as a potential hedge against policy-driven risks.

This paper investigates the impact of political instability on cryptocurrency markets, focusing on the attempted assassination of U.S. President Donald Trump on July 13, 2024. We analyze how this shock influenced cryptocurrency returns, volatility, and contagion dynamics, employing the Baba-Engle-Kraft-Kroner (BEKK) multivariate GARCH framework to capture volatility spillovers and time-varying correlations. Using data from the ten largest cryptocurrencies by market capitalization, we find significant and heterogeneous contagion effects across digital assets. Most cryptocurrencies exhibit positive cumulative abnormal returns (CARs) and increased volatility transmission in the post-event window, suggesting heightened interdependence. However, tokens such as Polkadot (DOT), Avalanche (AVAX), and Litecoin (LTC) show muted or negligible spillovers, likely reflecting distinct technological features or lower speculative intensity. Our findings highlight the broader integration of political shocks into digital finance.

Over the past decade, cryptocurrencies have rapidly evolved from a fringe innovation into a mainstream financial technology, disrupting traditional banking by enabling decentralized, trustless transactions. Originating with Bitcoin in 2009, the crypto ecosystem now includes over 18,000 digital currencies. While offering financial independence and innovation, the report critically examines the substantial environmental costs of cryptocurrency, particularly the energy-intensive consensus mechanisms like proof-of-work. These concerns raise urgent questions about crypto’s climate impact, prompting calls for sustainable reforms and regulatory oversight