Role of Central Banks & Regulators in Supporting Sustainable Finance in Developing Countries - PowerPoint Presentation

Presentation on theme: "Role of Central Banks & Regulators in Supporting Sustainable Finance in Developing Countries"— Presentation transcript

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 …