Russian Ministry of Finance Proposes Inclusion of Cryptocurrency in the Government’s Financial Literacy Strategy

Russia’s Ministry of Finance has proposed the inclusion of digital currency to the country’s financial literacy strategy for 2017-2023. The strategy was jointly developed by the government and the World Bank, TASS reports.

In his statement broadcast on the TV channel “Russia 24,” Minister of Finance Anton Siluanov explained that the inclusion of the topic of virtual currency is necessary to bolster the financial literacy of Russians. Such move is prompted by the interest in cryptocurrencies in the country is growing, even among children.

“In the strategy to increase the financial literacy of Russians, it is necessary to include the topic of cryptocurrency. The question of investing in instruments such as cryptocurrencies will, of course, be discussed, and we now see more risks than recommendations on investing in such instruments. So, explaining the possible consequences of investing in unregulated instruments will be one of the issues with which we will speak for the current year and until 2023.”

State of cryptocurrency adoption in Russia

The interest on digital currencies continues to grow in Russia. Based on a nationwide survey carried out by the National Agency for Financial Studies (NAFI) in July 2017, just 28 percent of Russians were aware of the presence of the virtual currencies, including Bitcoin. However, NAFI Project Manager Sergey Antonyan claimed that interest in the cryptocurrencies is increasing.

Moreover, at the all-Russian contest called Digital Economy: Generation Z that was held at the Horoshkol high school gymnasium in Moscow in September, Russian children competed and answered questions about such topics as digital currencies, chatbots, Blockchains and biometrics.

Meanwhile, the top five educational institutions in the country have integrated virtual currency into their conventional banking and finance courses. Among the schools, there are Moscow State University, Higher School of Economics, and St. Petersburg State University.

Ex-Bank of Ireland boss takes on new finance role

Richie Boucher has been named a director of former Barclays boss Bob Diamond’s African-focused finance house Atlas Mara.

It comes just a day after the Africa-born former Bank of Ireland chief handed the reins at the Irish bank to new boss Francesca McDonagh.

At Atlas Mara, Boucher is one of four new directors appointed to the board after Canadian investor Prem Watsa’s Fairfax signed a partnership deal with the business in June.

Boucher is close to Fairfax, an important Bank of Ireland investor in the wake of the crash, and he already serves on the board of Greek lender Eurobank Ergasias, where the Canadian firm is also an investor.

It was reported in June that Boucher was considering a role with Fairfax, advising banks within the group’s portfolio.

He also has deep ties to Africa, where he was born to Irish parents in what is now Zambia and initially went to school in southern Africa before moving to Ireland.

Toronto-headquartered Fairfax Financial Holdings, headed by Watsa, is often dubbed the Canadian version of Warren Buffet’s Berkshire Hathaway investment firm.

Atlas Mara was established in 2013 to invest in African banks. In June this year Fairfax invested $159m (£120m) in Atlas Mara for a 42% stake through its Fairfax Africa arm.

The deal with the business gave the Canadian backer the right to nominate four of its directors.

They have now been named as Mr Boucher, Fairfax executives Michael Wilkerson and Quinn McLean and Hisham Ezz Al-Arab, chairman of Egypt’s Commercial International Bank, where Fairfax has a stake.

Charles King’s Macro Raises $150 Million to Finance Film, TV Slate

The media company’s investors include Laurene Powell Jobs’ Emerson Collective, Ford Foundation, W.K. Kellogg Foundation and Libra Foundation.

Macro, the multicultural media company founded by former WME partner Charles King, has raised an additional $150 million in financing from a slate of investors that includes Laurene Powell Jobs’ philanthropic and investment vehicle.

The round, which incudes equity and debt financing, will allow Macro to finance and produce between four and six film and television projects each year. That slate will build on existing projects from Macro, including Dee Rees’ Mudbound.

In addition to Powell Jobs’ Emerson Collective, which invested in the company’s early days, participants in the round include Ford Foundation, W.K. Kellogg Foundation and the Libra Foundation. Macro’s existing investors also include MNM Creative, MediaLink and a roster of angel investors. Macro previously raised an undisclosed eight-figure round. Concurrent to this latest transaction, Macro has closed a credit facility with Bank of America Merrill Lynch.

“With Macro going into its third year, we have seen the initial seeds we planted come to fruition both commercially and critically,” said King, who serves as Macro’s CEO. “Our success is proof that our slate is striking a chord with audiences globally. This round of financing provides the capital necessary to build a robust slate of content that authentically represents the multi-faceted spectrum of our communities.”

Macro’s first feature for a major studio was Fences, directed by and starring Denzel Washington, which was distributed by Paramount last year and received four Oscar nominations. Macro is also prepping for the November release of Mudbound, which stars Carey Mulligan, Jason Clarke, Jason Mitchell and Mary J. Blige. Macro has also co-financed Roman J. Israel, Esq. from Dan Gilroy, starring Washington and Colin Farrell. It also has projects in development with Ryan Coogler, Ava DuVernay, Michael B. Jordan, Eva Longoria and Justin Simien.

“In supporting Charles and his extraordinary vision, I am thrilled to see the success Macro has generated in such a short period of time, and the rich, diverse, high-quality content Macro is bringing to our culture,” said Powell Jobs. “More than ever, it is vitally important that the content we consume reflects the complex diversity of who we are, inspires us to better understand experiences and perspectives different than our own, and brings forth talent, voices and stories that have been silent and unheard for too long.”

Climate Finance Institutional Update: Green Bond Issuance Reaches US$96 Billion

1 October 2017: September was marked by a flurry of meetings, announcements and reports by multilateral development banks (MDBs), climate funds and other actors working on international climate finance. Increases were reported both in MDB financing in 2016 and in green bond issuances during 2017. The UNFCCC Secretariat made available climate finance-related documents ahead of the UNFCCC Climate Change Conference in Bonn, and studies were released on a number of innovative financing mechanisms and tools.

Standing Committee on Finance Forum Calls for Climate-resilient Infrastructure Funding

Alongside the opening of the 72nd session of the UN General Assembly (UNGA 72) and Climate Week NYC 2017, both held in New York, which featured a number of climate finance-related events and discussions, the month of September saw two key multilateral climate finance-related events: the UNFCCC Standing Committee on Finance (SCF) Forum and the Green Climate Fund (GCF) Board meeting. Convening in Rabat, Morocco, the 2017 SCF Forum focused on ways to increase funding to climate-resilient infrastructure in developing countries. The 18th GCF Board meeting kicked off in Cairo, Egypt, on the final day of September, and has on its agenda a number of funding proposals, as well as discussions on strengthening the Fund’s operations. [UNFCCC Press Release on SCF Forum Outcomes] [18th GCF Board Meeting Documents] [GCF Press Release]

Financing the ‘Climate-Agriculture Nexus’ Draws Attention

In other September news, two forums focused on the nexus between climate and agricultural financing: the African Development Bank’s (AfDB’s) African Green Revolution Forum, taking place in Abidjan, Côte d’Ivoire, stressed the need to “cushion small-scale African farmers from the adverse effects of climate change,” and discussed measures to protect farmers from crop losses. The World Bank-convened AgriFin 2017 Forum, in London, UK, provided a networking place for climate finance investors and developing country financiers working with agricultural clients. [AfDB Press Release] [World Bank Press Release]

The Climate Investment Funds’ (CIF’s) Forest Investment Program (FIP) Pilot Countries Meeting was held in Luang Prabang, Lao People’s Democratic Republic, with the aim of enabling the sharing of lessons among FIP pilot countries relating to the design and implementation of FIP investment plans and other forestry activities. [CIF Press Release]

A workshop of the Climate Action Peer Exchange for Finance Ministries (CAPE) forum, held in Bogotá, Colombia, explored how finance ministries in Latin America could better use and design fiscal instruments for mitigating the impacts of climate change. CAPE, funded by the NDC Partnership Support Facility, the South-South Facility and the World Bank, is a peer learning network for discussions among ministers and senior technical experts from finance ministries around the world on the fiscal challenges related to implementing nationally determined contributions (NDCs). [World Bank Press Release] [World Bank Brief]

New Push for Transformational Investments, Risk Insurance

In major multilateral financing news, the UN and the World Bank announced the establishment of ‘Invest4Climate,’ a multi-stakeholder platform for transformational climate action investments, which will be further developed at the World Bank/IMF Annual Meetings in October 2017 and at the UN Climate Change Conference in Bonn in November 2017.

The World Bank announced it had received €10 million from the German Government for use towards the knowledge and technical assistance activities of its Global Index Insurance Facility.

The World Bank also announced it had received €10 million from the German Government for use towards the knowledge and technical assistance activities of its Global Index Insurance Facility (GIIF). The funding will target the scaling up of the use of extreme weather insurance instruments among poor and vulnerable smallholder farmers. [World Bank Press Release]

The UN Development Programme (UNDP) announced that the Russia-UNDP Trust Fund had approved seven projects, with a total value of US$6.7 million, which will support climate change mitigation and resilience actions, and enhance access to climate finance in 12 countries in Europe, the Commonwealth of Independent States (CIS), Africa and the Caribbean. [UNDP Press Release]

Green Bonds Shoot to Record Highs, Climate Finance Meets Blockchain

Bloomberg New Energy Finance (BNEF) reported that, as of September 2017, green bond issuance had reached US$96 billion since the beginning of the year. The company expects total issuances for 2017 to rise to US$135 billion, representing a 36% increase from 2016. [BNEF Article]

Also in September, decentralized autonomous organization ‘The Integrated Program for Climate Initiatives’ (DAO IPCI), touted by its developers as a “blockchain technology for carbon markets, environmental assets and liabilities,” which enables, among other things, peer-to-peer investments in third-party verified green projects, announced a presale of Mitigation Tokens (MITOs), described as “a digital CO2 cost equivalent.” An Initial Crowd Offering (ICO) is planned to be announced during the UN Climate Change Conference in November 2017. [CPLC Story] [DAO IPCI Website]

UNFCCC Secretariat Releases Finance-related Documents Ahead of COP 23

The UNFCCC Secretariat made available a number of finance-related documents ahead of the UN Climate Change Conference in Bonn in November, including: report of the GCF (FCCC/CP/2017/5); report of the Adaptation Fund Board (FCCC/KP/CMP/2017/6); a summary of the 2017 in-session workshop on long-term climate finance (FCCC/CP/2017/4); and a note on the second biennial high-level ministerial dialogue on climate finance (FCCC/CP/2017/8), held during the UN Marrakech Climate Change Conference in 2016. [Report of the GCF] [Report of the AFB] [Report on the 2017 LTF Workshop] [Note on High-level Climate Finance Dialogue]

MDBs Report Rise in Financing in 2016; GCF Readiness Disbursements Reach US$10 Million

The six major MDBs released their joint annual report for 2016. According to the report, the MDBs’ climate financing in developing countries and emerging economies grew from US$25 billion in 2015 to US$27.4 billion in 2016, of which 77% went to mitigation and 23% to adaptation. [AfDB Press Release]

A more balanced distribution between mitigation and adaptation financing has been achieved in climate finance flows to Caribbean small island developing States (SIDS). A Stockholm Environment Institute (SEI) study found that, in 2010-2015, a total of US$1.48 billion were committed, of which 48% went for mitigation activities, 32% for adaptation and 20% for both. [SEI Study]

In GCF institutional news, the Fund signed an accreditation master agreement (AMA) with the Inter-American Development Bank (IDB) and launched a guide titled ‘Mainstreaming Gender in Green Climate Fund Projects.’ The GCF also signed a US$300,000 readiness grant agreement with Viet Nam and announced that, by the end of August 2017, a total of US$10 million had been disbursed to 59 developing countries through the Fund’s readiness programme. [GCF Press Release on IDB] [GCF Press Release on Gender Guide] [GCF Press Release on Viet Nam] [GCF Press Release on Readiness Fund]

September 2017 Resources

Must-reads for the month of September include studies on green financing in Asia and the Pacific and outcome-based funding to support green enterprises in South Africa, a report highlighting the economic impacts of weather shocks, and information resources on green sukuks and support for NDC implementation, among others. Some of the highlights include:

  • A study by the Asian Development Bank (ADB) proposes national green financing vehicles for sustainable infrastructure investments in Asia and the Pacific [ADB Study];
  • A study by the World Bank draws lessons from an outcome-based funding mechanism piloted in South Africa for “de-risking” investments in promising green small and growing businesses [World Bank Study];
  • A report by the French Institute for Climate Economics examines opportunities and challenges relating to the deployment of “green credit lines” [I4CE Study];
  • A chapter of the International Monetary Fund’s (IMF’s) World Economic Outlook (WEO) 2017 considers the effects of weather shocks on economic activity, and a related blog post calls for the international community to “play a key role in supporting low-income countries’ efforts to cope with climate change,” noting this is “both a moral duty and sound global economic policy that helps offset countries’ failures to fully internalize the costs of greenhouse gas emissions” [IMF WEO 2017] [IMF Blog Post];
  • Marking the launch of Malaysia’s first green Islamic bond, a World Bank infographic explains what a green sukuk is [World Bank Infographic]; and
  • An episode in the UNFCCC’s ‘NDC Spotlight’ webinar series focuses on the IDB’s NDC Invest initiative, aimed at facilitating the transformation of NDCs into investment plans [UNFCCC Press Release].

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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past IISD climate finance updates can be found under the tags: Finance Update: Climate Change; and Finance Update: Sustainable Energy.

China flexes its economic muscles to push green finance on the New Silk Road

Deborah Lehr says Beijing’s leadership on the ‘Belt and Road Initiative’ means it can encourage partners to emulate its plans for sustainable development

China’s “Belt and Road Initiative” is likely to transform trading routes from Asia to Africa, the Middle East to Russia. With the world’s largest foreign reserves and a determination to build political and economic ties with strategically important governments, China is helping finance much-needed major infrastructure projects along the modern Silk Road. China is also using its economic might to promote its own set of standards, and nowhere is this more evident than in the field of green finance.

China has launched the world’s largest green bond market, officials’ promotions are linked to meeting environmental targets and banks grant preferential interest rates to sustainable projects. China will soon create the world’s largest experiment in pricing carbon with its national exchange.

China is also using its platform for green finance to encourage other countries. At the Belt and Road Forum in May, President Xi Jinping said, “We should pursue the new vision of green development and a way of life and work that is green, low-carbon, circular and sustainable,” and his words are being translated into action.

At the forum, China’s Ministry of Environmental Protection and the United Nations Environment Programme announced an international coalition for green development on the belt and road. UNEP sees tremendous opportunity in the initiative to promote massive sustainable development and be part of the reconstruction of war-torn countries like Afghanistan and Iraq. They also see it as an opportunity to require green standards both in financing and construction.

UNEP is offering its full range of resources. Erik Solheim, executive director of UNEP, wrote in an op-ed that, “Our environmental expertise runs from sustainable finance and clean technologies to ecosystems and sustainable consumption and production. … Through our Finance Initiative, we can work with private investors to promote sustainable investment practises along the Belt and Road.”

While UNEP may provide the know-how, China will be setting the green standards for countries seeking investment. In regulations issued last year, the government explicitly stated that it will “enhance the greenness of China’s outward investment”. The government is requiring that Chinese banks apply their own standards and criteria for green projects to any loans granted overseas and for infrastructure development. Of course, many of the contracts go to Chinese companies, as they are more familiar with the mandated standards and criteria.

China also has a long-term vision for “exporting” its carbon trade policies. This year, building on its seven regional pilot projects, it intends to launch a nationwide carbon market. This exchange, starting small by China’s standards, will rapidly become the world’s biggest cap-and-trade programme.

Even as China grapples with getting its own carbon market up and running, it has a plan for its growth internationally. China intends to work with developing countries along the belt and road – starting in Central and Southeast Asia and expanding across the Middle East and Africa – to support efforts to create their own carbon trading systems. These exchanges are likely to be small initially, to achieve economies of scale, but they will be permitted to trade on China’s national exchange, giving them much greater exposure and access to capital. This access, however, will depend on compliance with China’s policies.

China will set the standards for the growth and development of satellite exchanges. Their practices will be established in Beijing, not local markets. While the creation of these markets is for the greater good and global reduction of greenhouse gases, China’s ability to set the green standards will ensure they are adopted along the belt and road – encompassing no less than 60 countries and 4.4 billion people.

The initiative is a clear demonstration of China’s economic might and growing political power. However, it is also is a platform for showcasing China’s leadership in green finance, which may become one of its most meaningful exports along the New Silk Road.

Commerzbank, other banks join UBS and IBM trade finance blockchain

NEW YORK, Oct 4 (Reuters) – Commerzbank AG, Bank of Montreal, Erste Group Bank AG and CaixaBank SA have joined an initiative launched by UBS Group AG and IBM Corp aimed at building blockchain-based technology to support trade finance transactions.

The platform called Batavia would help banks and their clients automate the trade finance process, which remains highly manual and paper-based, the participating companies said on Wednesday.

Among other things Batavia will allow parties to track a transaction from when a shipment leaves a port to when it reaches its destination.

Blockchain, which was first developed to power cryptocurrency bitcoin, is a shared ledger of data that is maintained by computers, rather than a central authority. Over the past few years, banks have been investing millions of dollars in adapting the technology to run some of their data heavy and complex processes.

Banks have been collaborating and forming consortia to develop the technology.

Trade finance is considered a good use for the technology because it involves numerous parties such as the institutions financing the transactions, buyers, sellers, transporters and inspectors.

Currently each party maintains its own records, which can lead to mistakes and delays. The new platform aims to provide all participants with a shared record, reducing errors and driving more business.

“Trade finance is a perfect use case because there are so many participants in a trade ecosystem especially when you talk of global trade,” Marie Wieck, a general manager at IBM Blockchain, said in an interview. “Digitizing and creating a level of trust is a perfect accelerator (for business).”

A pilot is expected to take place with the new banks in the first quarter of 2018, Wieck said. The project was first announced in 2016.

The platform would also use so-called smart contracts, or computer programs on the blockchain that automatically enforce the terms of an agreement. For example the platform would release payments for a transaction along each step of the trade process.

While the finance industry continues to experiment with blockchain, it is still in its early days and some caution that it may take several years before it leads to any benefits.

IBM is also working with Nestle SA , Unilever Plc , Wal-Mart Stores Inc and other large food and retail companies on a separate blockchain project to track food supply chains.

Piramal Finance sanctions Rs 280 Cr to Puranik Builders

Piramal Enterprises Limited, through its subsidiary Piramal Finance Limited (PFL), announced a Rs 280 crore sanction to Puranik Builders for one of its flagship projects in Thane – “Puranik City Reserva”.

Piramal Finance, through its entire suite of products, is following a ‘financial partnership’ model, by extending holistic solutions to developers. Within the Real Estate space, PFL is uniquely capable of catering to the entire capital stack – right from early stage equity to late-stage debt, construction finance, lease rental discounting as well as bulk buying apartments – and is therefore, able to act as a perpetual provider of capital for its preferred relationships.

Khushru Jijina, Managing Director, Piramal Finance & Managing Director, Piramal Housing Finance, said “I am pleased to mark what we hope will be a long and rich relationship with the Puranik Group, that has a demonstrated track record of execution in the Thane micro market. We look forward to enabling the growth of the Group with our offerings across both the wholesale as well as retail business.”

Puranik City Reserva, a unique theme based ongoing project at Ghodbunder Road, being developed on 13 acres of land with 2.2 mn sq.ft. development potential worth Rs.2000 crores approximately, is to be completed over the next 6 to 7 yrs. The project has received a good response during its launch a couple of months back, and the construction on-site, is in full swing. Puranik Builders has so far developed over 5 Mn sq.ft. of real estate and is currently developing around 15 Mn sq.ft. in Thane, Pune, Lonavala, Karjat and Mumbai suburbs.

Microfinance institutions are struggling for survival. Here’s why

Four summers back, the plain-speaking Reserve Bank of India deputy governor KC Chakrabarty declared in a Kolkata conference that micro lenders may become irrelevant if banks turn efficient. Come 2017, with four of the 10 largest microfinance companies turning into small banks, and the second largest— Bharat Financial Inclusion— set to dissolve into IndusInd Bank, Chakrabarty’s words are turning out to be prophetic.

Two decades after India-born American citizen Vikram Akula founded SKS Microfinance, which was rechristened as Bharat Financial, the industry that delivered livelihood to millions of poor is facing its pincer moment with private banks giving a big push to micro lending.

The business model — propounded by Nobel laureate Mohammad Yunus and successfully implemented in India by Akula and Chandra Shekhar Ghosh — still remains profitable, but the vagaries of regulations and populist politics like farm loan waivers keep them on the edge.

The tiny size of these institutions makes them vulnerable to even a small adverse development as their finances remain fragile. Unlike banks, which have multi products and an assured deposit base, micro lenders are dependent on markets for funds, which turn hostile at the smallest of events that affect business.

“Today banks are equally in the microfinance space as much as we are,” says MR Rao, managing director with Bharat Financial Inclusion. “So, banks are looking to partner MFIs either as subsidiary or by way of strategic stakes. As MFIs grow, they too need capital badly to remain on the growth path. It will be difficult for pure-play MFIs to grow independently without support of an anchor investor.”

Microfinance institutions (MFIs) came into being in the 90s as banks’ reluctance to lend to those without credit history provided an opportunity to those willing to take risk and organise rural communities.

Though the gap still exists, the likes of Axis Bank, HDFC Bank or RBL Bank are developing their own ecosystem to reach out directly to the poor for higher returns. There are pockets of oversupply squeezing growth potential for the pure-play micro lenders.

India has some 223 MFIs, including societies and NGO-run entities, and 168 of them are registered with Sa-Dhan, the association of community development finance institutions. There are 47 non-bank finance company-micro finance institutions (NBFC-MFIs) registered with Microfinance Institutions Network (MFIN), an industry body, covering 90% of the portfolio While the top 10 find it easier to get equity or bank loan, the smaller ones are always at a disadvantage.

Piramal Finance sanctions Rs 280 cr to Puranik Builders

Piramal Enterprises Ltd, through its subsidiary Piramal Finance Limited (PFL), has sanctioned Rs 280 crore to Puranik Builders for one of its flagship projects in Thane.

Piramal Finance, through its entire suite of products, is following a ‘financial partnership’ model, by extending holistic solutions to developers.

Khushru Jijina, Managing Director, Piramal Finance & Managing Director, Piramal Housing Finance, said “I am pleased to mark what we hope will be a long and rich relationship with the Puranik Group, that has a demonstrated track record of execution in the Thane micro market. We look forward to enabling the growth of the Group with our offerings across both the wholesale as well as retail business.”

Within the Real Estate space, PFL is uniquely capable of catering to the entire capital stack – right from early stage equity to late stage debt, construction finance, lease rental discounting as well as bulk buying apartments – and is therefore, able to act as a perpetual provider of capital for its preferred relationships.

Shailesh Puranik, MD, Puranik Group, said “We are extremely pleased to have started our relationship with the Piramal Group. With this deal, it will help us to achieve a complete financial closure for the project. We firmly believe that the market today presents attractive opportunities and we look forward to relying on the Piramal platform’s experience and expertise as a lender of choice as we chart out our own path towards further growth.”

Puranik City Reserva, a theme based ongoing project at Ghodbunder Road, being developed on 13 acres of land with 2.2 mn sq.ft. development potential worth Rs 2,000 crore approximately, is to be completed over the next 6 to 7 yrs.