Bank for International Settlements launches Asian green bond fund

The headquarters tower of the Bank for International Settlements (BIS) is seen in Basel, Switzerland March 18, 2021. REUTERS/Arnd Wiegmann

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TOKYO, Feb 25 (Reuters) – The Bank for International Settlements (BIS) on Friday launched a new fund investing in Asian green bonds to help finance climate risk projects in one of the world’s most vulnerable regions. exposed to natural disasters.

Open to central banks worldwide, the Asian Green Bond Fund invests in US dollar-denominated green bonds issued in Asia by governments, international financial institutions and companies that meet international green standards.

Green bonds are financial instruments that finance environmentally friendly projects and provide investors with regular or fixed income payments.

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Created with the contribution of entities such as the Asian Development Bank, the fund will help finance environmentally friendly projects in areas such as renewable energy production and energy efficiency in the Asia-Pacific region, said the BRI.

“In Asia, there is a strong will from central banks to promote the greening of their economies,” said Siddharth Tiwari, BIS Chief Representative for Asia and the Pacific region.

“One of the innovations here is the partnership that has started between the central bank and the development finance communities,” he told Reuters.

With two other funds already in place, the BIS said it would manage a total of $3.5 billion in green bonds.

The fund will conduct annual reviews to ensure it reflects changes in the global green finance landscape.

While the fund will initially target green bonds denominated in dollars, it will consider during the first and second annual reviews whether to extend its investments to transition bonds and green bonds denominated in local currency, Tiwari said.

“The challenge is for investors and everyone else to be able to assess the climate risk in the region accurately, so that they can invest rationally and not pose a risk to financial stability” , did he declare.

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Reporting by Leika Kihara; Editing by Christian Schmollinger

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