I am all for a bit of ambition when it comes to mobilizing funds for development and climate finance.
But I also think it is helpful to be somewhat realistic. 400b SDRs is roughly the World Bank Group's full balance sheet (IDA + IBRD)
Getting that would be huge
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But I also think it is helpful to be somewhat realistic. 400b SDRs is roughly the World Bank Group's full balance sheet (IDA + IBRD)
Getting that would be huge
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For technical reasons relating to how various countries can use their reserves, I don't think it is at all realistic to get close to that number with the AfDB's subdebt proposal.
Think you need both subdebt and the SDR bond that I and @StephenPaduano have proposed.
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Think you need both subdebt and the SDR bond that I and @StephenPaduano have proposed.
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And you probably need a few other ideas as well ...
But I also don't think some of the numbers being tossed around meet basic financial realism tests.
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But I also don't think some of the numbers being tossed around meet basic financial realism tests.
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Matching the size of the WB's current balance sheet is big not small (especially if done in the next 5-10ys)
China's two policy banks lent a bit less than $1 trillion over 10 years and that was considered big not small (another reference point for "realism")
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China's two policy banks lent a bit less than $1 trillion over 10 years and that was considered big not small (another reference point for "realism")
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China of course hasn't disclosed the total exposure of the CDB and Exim, but the Aid data numbers and other metrics suggest a number under $1 trillion.
and the associated debt flows were a bit much for some countries ...
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and the associated debt flows were a bit much for some countries ...
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Bottom line -- I don't see the point of arguing that mobilizing a couple of hundred of billions through MDBs in the next 5 years is "small" --
it is in fact the right scale for real ambition.
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it is in fact the right scale for real ambition.
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By contrast I do worry that the WB's current level of ambition is far too small (increasing the balance sheet by say $10b over the next few years does lack vision and financial ambition)
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a reference for how I think about scale and flows -- which is a bit different than the usual metrics the WB and others use (but consistent with the standard financial views of how to think about balance sheet size and net lending)
8/8
cfr.org
8/8
cfr.org
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