Dhaka, Bangladesh (BBN)– Bangladesh Bank (BB) has planned to invest some of its foreign exchange reserve in green bonds to help developing a global green finance support bond market.
BB Governor Dr. Atiur Rahman disclosed this while addressing at a discussion meeting titled ‘Possible International Cooperation Pathways and Next Steps for Green Finance,’ held in Lima on October 8.
“We’re actively seeking to deploy some of our foreign exchange reserves in investments in liquid issues of green bonds of multilaterals and other highly rated financial corporates,” the central bank chief announced.
He also said the BB believes that besides traditional long term investors like life insurers and pension funds, sovereign wealth funds and new multilateral fund initiatives like the proposed BRICS infrastructure fund can make big contributions in promoting financing of global green growth.
“Debt finance raising by non-financial corporates is still insignificant in all LDCs’ underdeveloped capital market, green project initiatives like others, therefore, remain overly dependent on financing from banks and financial institutions,” BB Governor Dr. Rahman explained.
The local green project initiatives are also generally too small in size and stature to raise finance affordably from international markets by issuing green bonds, according to the Governor.
“We are therefore looking for ways of developing liaison between networks of local green project entrepreneurs and multilaterals like the WB, IFC that raise green bond funds on their own high credentials for investments in eligible green project initiatives,” the Governor noted.
Dr. Rahman also said environmental harmony is one of the three pillars of sustainable development. “Large scale green transformation is a must for ensuring environmental sustainability towards pathways of long-term sustainable development.”
Policy interventions at the national and international level are essential to motivate and align both the supply and demand sides of the financial assets to support sustainable development financing, he added.
“Greening the growth process through sustainable green financing will pave the way towards green economy. But the transformation from conventional consumption, production and growth practices to green growth process is not so automatic rather very challenging for host of reasons,” the Governor observed.
He also said these challenges are sometimes very diverse across countries and, in most of the cases, are acute in developing countries like Bangladesh.