The following thesis examines the European Green Bond Standard and its impacts on financial markets. It analyses the existing green bond market, its benefits, and the main obstacles that have limited its further growth. The European Standard addresses the lack of standardisation and thus prevents greenwashing. At the core lies the Taxonomy Regulation, which is singled out as the differentiating factor for identifying environmentally sustainable investments. Stringent reporting and external review requirements will reduce transaction costs and information asymmetry between market participants, however the precise role of the standard in the market remains ambiguous. Although the European Green Bond Standard Regulation is a step in the right direction, it is contradictory to its objectives in certain areas. In such cases, the thesis proposes different policy recommendations. In the short term, the European Green Bond Standard is expected to foster competition in the market. However, its narrow design may inadvertently lead to market fragmentation. Initially, due to practical difficulties stemming from the EU Taxonomy, a wider application in the European area or internationally cannot be expected. In the long term, once the problems of the Taxonomy Regulation are addressed and environmental sustainability reporting is normalized, European Green Bond issuance will become increasingly easier for issuers. Given the strength of the European green bond market and the process of unilateral regulatory globalisation by the EU, the European Green Bond Standard may become the leading standard in the market.
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