Dhaka, Bangladesh (BBN)– Former Bangladesh Bank (BB) Governor Atiur Rahman has emphasized issuance of green bond to attract more foreign direct investment (FDI) from overseas sources for building a sustainable economy.
“Growing urbanization and industrialization in developing economies like Bangladesh will need a huge amount of additional investment fund and green bond could be a desired option for the sovereigns to support and encourage central bank, development banks and city corporations to go for such blended strategy of mobilizing green resources from abroad,” the former governor said while addressing at a panel discussion on green bond at the Asian Development Bank (ADB) headquarters in Manila on Wednesday.
“This could be as good as attracting foreign direct investment which could as well be contributed by our NRBs who may be buying this green bond as they dream of building desired infrastructures of their motherland as fast as possible,” Dr. Rahman explained.
The panel was moderated by Noel Peters of ADB and participated by Christopher Knowles of EIB, Gregory Schneider Maunoury of Humanis Gestion of Actifs and Anthony Ruschpler of ADB, according to a message.
“We, therefore, need to work together including public finance policy makers, regulators, banks and municipalities. This collaboration will also help avoid green washing as there can be closer monitoring of whether the mobilized resources are actually going to green projects or not,” the former governor explained.
He also said only deeper familiarization of all the stakeholders can instill sense of ownership of new financial product like green bond.
“So there is an imperative of educating the issuers and investors of green bond,” Professor Rahman observed.
Multilateral organizations like ADB and IFC can play this bridging role of providing technical assistance for such financial literacy and exchange of lessons on such product, according to Dr. Rahman.
The former governor said that Bangladesh, like most developing country, depends overwhelmingly on banks for financing medium and long-term financing.
“So there can be mismatch between tenors of savings and investment. Hence the need for developing capital market,” he noted.
He also said: “Green bonds can flourish only in an environment where conventional bond market has already been vibrant. So there is a need for developing the ecosystem for the overall bond markets as well.”
In addition, the challenges like standardization, appropriate regulations, disclosures, lack of awareness, governance issues have to be addressed to jumpstart the issuance of green bond, the former governor added.
“Given the abundance of liquidity in the developed economies we can draw international investments from their pension fund or sovereign wealth funds as retail and institutional investors value green products,” he noted.