Asian Development Bank (ADB) has introduce a funding guarantee initiative to assist Asia in lowering greenhouse gas emissions and constructing infrastructure that can withstand the effects of climate change. This unique funding scheme is the initial approach of its kind that has been created by a development bank and signifies the demand placed on such financial institutions to be innovative in addressing the climate emergency that has severely impacted Asia.
IF-CAP (Innovative Finance Facility for Climate in Asia and the Pacific), is the initial leveraged guarantee mechanism for climate financing implemented by a multilateral development bank. The initiative will aid ADB in achieving its objective of utilizing USD 100 billion from its own resources to combat climate change between 2019 and 2030.
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As part of the plan, Denmark, Japan, South Korea, Sweden, the United Kingdom, and the United States will offer assurance for some of the bank’s loans and accept responsibility for losses if the borrowers fail to repay their debts. This will release the funds that ADB needed to maintain for credit risks and enable it to raise the amount of financing it provides to climate-focused initiatives across Asia.
Asia, as one of the regions that are highly susceptible to the consequences of climate change. The declaration of this financing strategy comes as a priority. It happened even before the gathering of Asian financial experts in Incheon, South Korea, where they are expected to discuss how the area should tackle the financial repercussions of market instability.
Source : Reuters.com