The financial sector, including central banks, can have an important role in supporting the transition to a low-carbon economy and mitigating the risks associated with climate change. The purpose of the paper is to give a brief overview of selected researches on the field ofgreen central banking and to examine how central banks integrate green initiatives into their operations and practices to address climate-related risks within their core policy frameworks. Since the European Union has set ambitious targets to reduce greenhouse gas emissions and speed up transition to a low-carbon economy through its European Green Deal, the focus of the paper is to explore the development of green central banking in the EU, including the challenges and opportunities that this presents. The research pointed out many advantages of green central banking, but also limitations. Central banks have a limited set of policy tools at their disposal to promote environmental sustainability. They may not be able to directly regulate carbon emissions. Policies that discourage investments in fossil fuel companies could have a negative impact on economic growth and price stability. Additionally, incorporating climate risks and sustainability factors into financial regulation could increase complexity and compliance costs for financial institutions, potentially leading to unintended consequences. There are also other challenges associated with the development of green central banking. Central banks must ensure that their efforts to promote environmental sustainability do not compromise their primary objectives of maintaining price stability andfinancial stability. This requires careful consideration and analysis of the impact of environmental sustainability on the economy and financial system.