Atiur Rahman Professor Department of Development Studies Dhaka University Nudging the banks beyond shorttermism to serve goals of sustainable development In developing countries financing is generally ID: 660330
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Slide1
Role of Central Banks & Regulators in Supporting Sustainable Finance in Developing Countries
Atiur
Rahman
Professor, Department of Development Studies
Dhaka UniversitySlide2
Nudging the banks beyond short-termism to serve goals of sustainable development
In developing countries financing is generally-
Short-term in nature
With large presence of state-owned banksAnd supervisory challengesFinancial system or market alone is not enough.“Markets have hands but not soul or conscience”
Financing real economy
Post-Paris Climate Agreement & UN mandate for financing SDGs requires financing real economySlide3
Broader Developmental Role of the Central Banks
Policy innovations to confront climate vulnerabilities have already begun in some developing countries
In Bangladesh, the central bank has come out of its conventional narrow shell-
Priority areas are- Agriculture, MSMEs, Women Entrepreneurs, Green Business and IndustriesMandatory ERM guidelines for banksSector specific policies & reporting
“We tried many small things, monitored what works or does not, and asked why.”Slide4
Bangladesh Bank’s Role in Greening the Finance System
Besides greening its own energy supply, is leading by examples and demonstrating commitment-
Green finance efforts funded by own resources as well as support from international development partners.
Using local bank liquidity for green finance.Promoting and awarding green banking nationally.
Macro-prudential and supervisory moves to encourage green banking.Slide5
Early and Gratifying Outcomes
Around 40 thousand projects received green finance (worth USD 7 billion), mostly through private banks.
As a result-
13 million people have access to off-grid energy.SHS reaching 4.5 million households replaced kerosene worth USD 225 million per year and saved 41 thousand m. ton of firewood.Solar-powered irrigation will save huge amount of forex now spent on diesel.Slide6
Journey Ahead
Greening finance is a
journey
and not a destination.Central bank alone is not enough, highest level of policy ownership is needed.Three fold role of public finance is crucial-Financial support (funding & subsidies)
Market development (green bond)Rules and regulations
Coordination and capacity building of the policy and implementation ecosystem.Slide7
Let’s move ahead, together, with resolve, curiosity, and humility …