Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean
Despite exhibiting remarkable growth, the green bond market still represents less than 1 percent of the global bond market. This paper identifies two challenges that might slow the adoption of green bonds and presents a menu of responses that policymakers, regulators, and public financial institutions can use to offset these challenges. Specifically, it explores two key dimensions: (i) the risk profile of the green bond instrument and (ii) the transaction costs associated with issuance of and reporting on green bonds. New approaches to risk design and technology-based approaches are essential to untap the potential of green bond markets, particularly in Latin America and the Caribbean and other developing regions. The incorporation of financial mechanisms such as covered bonds and guarantees can adequately address the risk of the issues, making the market more attractive for investors. Enhanced regulation and education and leveraging efficiencies of new technologies such as distributed ledger technologies can substantially reduce monitoring and reporting costs, while improving transparency in the use of proceeds and market integrity.
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dig-bid-node-195422020-06-04T17:22:44ZTransforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean 2019-09-27T00:00:00+0000 http://dx.doi.org/10.18235/0001900 https://publications.iadb.org/en/transforming-green-bond-markets-using-financial-innovation-and-technology-expand-green-bond Inter-American Development Bank Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors Despite exhibiting remarkable growth, the green bond market still represents less than 1 percent of the global bond market. This paper identifies two challenges that might slow the adoption of green bonds and presents a menu of responses that policymakers, regulators, and public financial institutions can use to offset these challenges. Specifically, it explores two key dimensions: (i) the risk profile of the green bond instrument and (ii) the transaction costs associated with issuance of and reporting on green bonds. New approaches to risk design and technology-based approaches are essential to untap the potential of green bond markets, particularly in Latin America and the Caribbean and other developing regions. The incorporation of financial mechanisms such as covered bonds and guarantees can adequately address the risk of the issues, making the market more attractive for investors. Enhanced regulation and education and leveraging efficiencies of new technologies such as distributed ledger technologies can substantially reduce monitoring and reporting costs, while improving transparency in the use of proceeds and market integrity. Inter-American Development Bank Juan Antonio Ketterer Gabriela Andrade Maria Netto María Isabel Haro application/pdf IDB Publications Latin America and the Caribbean en |
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Estados Unidos |
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America del Norte |
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Biblioteca Felipe Herrera del BID |
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English |
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Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors |
spellingShingle |
Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors Inter-American Development Bank Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
description |
Despite exhibiting remarkable growth, the green bond market still represents less than 1 percent of the global bond market. This paper identifies two challenges that might slow the adoption of green bonds and presents a menu of responses that policymakers, regulators, and public financial institutions can use to offset these challenges. Specifically, it explores two key dimensions: (i) the risk profile of the green bond instrument and (ii) the transaction costs associated with issuance of and reporting on green bonds. New approaches to risk design and technology-based approaches are essential to untap the potential of green bond markets, particularly in Latin America and the Caribbean and other developing regions. The incorporation of financial mechanisms such as covered bonds and guarantees can adequately address the risk of the issues, making the market more attractive for investors. Enhanced regulation and education and leveraging efficiencies of new technologies such as distributed ledger technologies can substantially reduce monitoring and reporting costs, while improving transparency in the use of proceeds and market integrity. |
author2 |
Juan Antonio Ketterer |
author_facet |
Juan Antonio Ketterer Inter-American Development Bank |
topic_facet |
Green Finance Renewable Energy Green Bond Green Infrastructure Financial Market Z00 - Other Special Topics: General: General Q00 - Agricultural and Natural Resource Economics • Environmental and Ecological Economics: General: General G00 - Financial Economics: General: General green bond; green bond market; green bond proceeds; renewable energy; financial mechanisms; financial market; covered bonds; guarantees; transparency; use of proceeds; market integrity; green investment; capital market development; green bond instrument; reporting on green bonds; green investors |
author |
Inter-American Development Bank |
author_sort |
Inter-American Development Bank |
title |
Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
title_short |
Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
title_full |
Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
title_fullStr |
Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
title_full_unstemmed |
Transforming Green Bond Markets: Using Financial Innovation and Technology to Expand Green Bond Issuance in Latin America and the Caribbean |
title_sort |
transforming green bond markets: using financial innovation and technology to expand green bond issuance in latin america and the caribbean |
publisher |
Inter-American Development Bank |
url |
http://dx.doi.org/10.18235/0001900 https://publications.iadb.org/en/transforming-green-bond-markets-using-financial-innovation-and-technology-expand-green-bond |
work_keys_str_mv |
AT interamericandevelopmentbank transforminggreenbondmarketsusingfinancialinnovationandtechnologytoexpandgreenbondissuanceinlatinamericaandthecaribbean |
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1809107950697971712 |