asia that is well - adjusted and integrated into the world markets will add prosperity and stability to the world economy for years to come. see henry ( 2006 ) for a critical review of the literature on theory and evidence of capital account liberalization. references 1. abreu, d. and m. brunnermeier ( 2003 ). “ bubbles and crashes ” econometrica, vol. 71, no. 1, pp. 173 - 204. 2. aguiar, m. and g. gopinath ( 2007 ). “ emerging market business cycles : the cycle is the trend, ” journal of political economy, vol. 115, pp. 69 - 102, february. 3. bannier, c. e. ( 2005 ). “ big elephants in small ponds : do large traders make financial markets more aggressive? ”, journal of monetary economics, vol. 52, no. 8, november, pp. 1517 - 1531. 4. henry, p. b. ( 2006 ). “ capital account liberalization : theory, evidence and speculation, ” nber working paper 12698, national bureau of economic research, cambridge ma, november. 5. kose, a., e. prasad, and m. terrones ( 2005 ), “ growth and volatility in an era of globalization, ” imf staff papers, vol. 52, pp. 31 - 63, international monetary fund, washington d. c.. 6. lane, p. r. and g. m. milesi - ferretti ( 2006 ). “ the external wealth of nations mark ii : revised and extended estimates of foreign assets and liabilities, 1970 - 2004 ”, working paper wp / 06 / 09, international monetary fund, washington d. c. 7. parente, s. l. and e. c. prescott ( 1999 ). barriers to riches, third walras - pareto lecture, university of lausanne, switzerland, october.

##cured bonds issued globally in 2020 originating here. and the market is growing rapidly – the outstanding volume of green bonds issued in the eu has grown almost eight - fold since 2015. environmental, social and corporate governance ( esg ) investment is also concentrated in europe. the assets under management of investment funds with esg mandates have almost tripled since 2015, and over half of bond funds are domiciled in the euro area. 7 in addition, the euro has taken the lead as the global currency of green finance. last year, around half of the green bonds issued worldwide were in euro. there is immense potential for this role to grow once the green transition takes off worldwide and we see a generational transfer of wealth to millennials who are bound to be concerned about the future. crucially, the green bond market has already achieved greater pan - european scale. holdings of green bonds within the eu have, on average, half the home bias of conventional bonds. and this means deepening the market is a different type of challenge. we do not need to undo the past – we need to create a new framework that did not exist before. so we have a real opportunity to build a genuinely european capital market from the outset. green capital markets could also act as a catalyst for the overall structural transformation of europe, ensuring that it happens both quickly and evenly across eu countries. these capital markets would not just add debt into the green finance mix, they would also add 2 / 4 bis central bankers'speeches equity, which – as ecb research demonstrates – typically leads to more green innovation and a faster reduction in carbon emissions. 8 and they could spark the take - up of digital technologies such as smart urban mobility, precision agriculture and sustainable supply chains, which are crucial to the green transition. 9 with their pan - european reach, green markets could also help all countries to access the capital they need to finance economic transformation – not only those with the most sophisticated financial markets. that would support convergence within europe, enabling capital to flow to regions that are currently lagging behind in the transition to a more sustainable economy. in order to build momentum, the “ public sector dimension ” should be part of the picture. the issuance of green bonds by governments will be key to funding major infrastructure projects, which in turn helps create a pipeline of projects for the private sector to invest in. as part of the next generation eu fund, the european commission will shortly be placing €225 billion of green bonds, making it