Clearing a Path for Global Development Finance: Enabling Basel and Development Guarantees to Deliver on Sustainable Development Goals

On August 2, 2017, the Milken Institute Center for Financial Markets (CFM) convened a roundtable to discuss how addressing global financial regulatory issues may foster greater G20 bank investments aligned to the U.N. Sustainable Development Goals (SDGs). In particular, discussions focused on how to improve the use of development guarantees to incentivize blended/innovative financing solutions either through enhanced guarantee structures, or reforms to the regulations and rules that govern them.

The session identified three key takeaways:

1. Development organizations must understand and align the roles of local and international capital;
2. Guarantees offer promising opportunities, but must recognize and reshape banks’ market incentives and operational constraints to spur increased SDG-aligned investment;
3. Data and appropriate risk management must drive any proposed global financial regulatory reforms.

Although this initial paper includes direct opinions culled from all discussants (G20 banks, bilateral and multilateral guarantors, development finance institutions and Basel experts) it does not contain directly attributable content.

Based on feedback to this summary, a set of comprehensive considerations will be prepared and shared with the Blended Finance Task Force, a group established by the Business & Sustainable Development Commission to deliver recommendations for financing the SDGs at Davos in January 2018. Additionally, CFM will circulate these recommendations to other working groups that are informing the Bank of International Settlements (BIS), the Financial Stability Board (FSB), and the G20 regarding the unintended consequences of financial regulations on developing and emerging markets.