Smart Borrowing: How to Navigate Loans with a Good Credit Score

Did you ever think of getting a hassle-free loan from a firm good at money lender toa payoh with a quick approval? Well, this quick and easy approval depends upon your credit history and how you will repay the borrowed amount. So, let’s take quick insights into credit scores and things to consider before borrowing. 

Understanding credit score

Credit score- a financial tool, measuring the probability of a person clearing their debts. Those with lower scores are considered riskier, having a higher chance of skipping their EMIs. Apart from this, individuals with higher scores are considered more trustworthy, with a track record suggesting they’ll honor their financial commitments and not skip payments.

A credit score is of utmost importance. A high credit score gives the surety of your responsible character towards timely loan repayment. Banks rely on credit scores to assess the amount of money they can lend you. If your credit score is poor, you may either be offered a smaller loan or be rejected altogether. In contrast, licensed moneylenders don’t pay as much attention to your credit score, although it can still be beneficial to have a good credit score.

Factors to consider before borrowing

While licensed moneylenders provide a valuable service,  it’s essential to consider a few factors with a discerning eye. Here are key considerations to keep in mind before securing a loan:

  1. Interest Rates and Fees

Some unethical lenders include some hidden charges or extra fees in the fine print. Hence, reviewing all costs closely is the wisest choice you can make.

  • Repayment Schedule

It is advised to choose a plan that aligns well with your income cash flows. A mismatch between your pay schedule and repayment dates can lead to financial strain and increase the risk of missing payments.

  • Read Contracts Thoroughly

It’s important to read loan documents carefully before signing. Only sign a loan agreement once you fully understand the interest rate being charged, the tenure period, the fees involved, and any penalties for late/missing payments.

  • Borrow Only What You Need

Even if you are accepted for a larger amount, try not to borrow more than required. Over borrowing might trap you in a debt cycle. Plan your loan amount and repayment strategy according to your budget to maintain financial stability.


In conclusion, one should proceed cautiously while applying for a loan. A good credit score, awareness of terms, and borrowing within means are crucial to ensure financial health and avoid the pitfalls of debt.

Qualities of a good money lender

The merits of a good borrower are discussed in a separate post.  Now that you know the qualities you should have and how to finally increase your chances of getting loan approval, it’s time to say hello to those qualities – if not great – debt Payers should be. You will find all these qualities in best licensed money lender in philippines for sure.

It includes the following:

1) Flexible

Banks and other lending companies follow specific guidelines set by Bangco Central of Pilipinas. In fact, they are regularly audited to make sure they meet the requirements.

Still, go for lenders who can offer flexibility in financial terms.  They should be able to offer you terms according to your ability, without breaking any rules, whether your interest rate is reduced or the maturity of your loan is increased to one month.

2) Responsible

Bank conditions can be frightening and disturbing for the common man.  That’s why if you don’t understand something, don’t hesitate to ask questions. It will give you complete information about the loan including benefits and risks.  A good lender should be able to respond to your concerns, no matter how negative, to help you determine if you are making the right choice.

3) Unique reputation

Are you willing to pay someone with negative reviews?  Would you like to get money from lender A who was involved in a scam a few years ago?

Also, be sure to make maximum use of Facebook and other social media channels to test the credibility of the lender you are looking for.  The good thing about social media is that people can easily share their first experience of service and treatment.  This will make it easier to see how other customers have been treated and how the loan application has been processed.

4) Experience

In addition to credibility and credibility, the lender’s track record or experience is also important in determining whether the lender is good or not.

According to experience, this means that the lender must be in the industry for years, know the loan entries, and be equipped with the necessary and sufficient knowledge to meet your needs.  However, the more experienced the lender, the better it will be for the lender to meet your financial needs.

5) A partner and not just a lender

   Lenders often think too much of themselves because of their abilities and skills.  This is not a good sign because a good lender should see himself as a strategic partner.  In addition to helping you find financial instruments, a good lender also provides administrative support that can further improve your business.


In extension mode, the required teamwork between you and your lender can be compared to a pair of cops working as partners.  You may not expect your partner to take a pill for you, but you do expect them to cover your back when there are signs of trouble.  Lee Fuchs, AgriBank FCB’s Senior Loan Officer in St. Paul, MN, has compiled a list of six features based on growth.

Accounting for Cryptocurrency Tax Impacts

The end of the year has arrived with holidays, gift-giving and ringing in the New Year, but it also brings the beginning of the tax season as well. So, with one week left to take care of any stock sales or crypto position changes, French Larry Taylor reminds folks that they should probably be thinking about how their cryptocurrency activity is going to impact their income taxes for the new year’s income tax filing.

Volatility Increased Trading Activity

There’s no question that 2021 was a volatile year for cryptocurrency. French L. Taylor watched with everyone else as Bitcoin rocketed up to over $65,000 a coin, Etherium hit a high of almost $5,000 a coin, and plenty of other currency and tokens produce significant income for holders as well. There were also plenty of losses to be had, which can work against gains Taylor points out. While the heyday of early winter and spring produced great gains, the summer of 2021 was brutal as the digital market dipped. Again some returned in the fall, and folks still closed the end of 2021 higher than where things were at in pricing at the end of 2020. All of that means serious tax reporting, French Larry Taylor expects, from capital gains taxes to outright income earning as well.

Airdrops Get Taxed Harder Than Regular Trading

While French L. Taylor agrees it doesn’t apply to everyone, for a minority of fortunate holders some big airdrops were realized early in 2021. These surprise distributions from the administrators of a given cryptocurrency deposited sizable sums of digital coins into the wallets of those who already had similar tokens. Uniswap and Ampleforth were two of the big ones in 2021 (many folks didn’t realize they were included until well into 2021).

However, from the IRS’ perspective, the value of the coin when it was received is taxable income at the regular income tax rate (as opposed to capital gains). Regardless of what one does with the free digital coin afterwards, whatever it was worth at the time of receipt has to be added to one’s reporting income for the year. French L. Taylor points to a decision letter from the IRS in 2019 about airdrop taxability. Bonus free deposits count in this category as well, which is common for marketing of crypto-exchanges, programs and decentralized-finance teasers.

Most Trading Falls into Capital Gains

On the regular cryptocurrency trading side of things, much depends on whether a person’s crypto position has been held for a long time or was short-term (which is most people who jumped in this year). The calculation works very similarly to regular stocks that are either short or long. Short-term sales and related gains are taxed at the full capital gains rate. If, on the other hand, someone held the crypto for a year or longer, as in some fortunate cases with Bitcoin for example, and then sold it in 2021, it will be taxed at a lower, long-term capital gains rate, notes French L. Taylor.

International is Not an Excuse to Not File

French Larry Taylor also raises a flag for those who use international exchanges and hope to be off the hook from taxes because the digital coin they trade is outside the U.S. or a U.S. market player, think again. Not only does the taxpayer have to report the existence of the foreign account, all transactions with gains have to be reported as well for capital gains taxes due, regardless of being traded on an exchange in Shanghai or Singapore, for example.

Should folks get professional help? It’s not a bad idea for 2021, French L. Taylor agrees. This is one tax year where things will be complicated.

Nils Larsen Details How a Financial Manager Can Help You Prepare For Retirement

Nils Larsen, a financial manager, knows that many people are unsure how to approach retirement. Younger people often have no idea how much they need to save, how to wisely save or invest, or even what their retirement needs may be. A financial manager can sit down with you at any age and help you prepare for retirement. Here are a few of the various ways that they can help. 

How a Financial Manager Can Help You Determine Your Retirement Needs

Nils Larsen says that one of the first ways that a financial manager can help you prepare for retirement is by helping you determine what your retirement needs may be. Retirement needs can vary based on your lifestyle and what your goals are for the future. Someone who already owns a house and plans to have that house paid off by the time they retire may need different amounts of money compared to someone who wants to travel the world when they retire. A financial planner will listen to your goals and help you create a plan to achieve those goals. 

How Financial Managers Account for Inflation

Nils Larsen knows that accounting for inflation can be challenging. Items today cost a lot more than they did one, two, or even three decades ago. Since inflation is not consistent, it can be hard to determine how to account for inflation in your retirement planning and to know how far a dollar will go by the time you retire. Financial planners can use averages to help you determine approximately how much you will need to live comfortably when you retire, while also accounting for potential inflation. 

How a Financial Manager Explains Taxes to You

The final way that a financial manager can help you is by helping you understand tax rules, laws, and implications as you plan for retirement. You can reduce your tax liability by investing in certain ways, but, if you pull the money out too soon, you may have to pay taxes on your gains. A financial manager can help you to understand different investment tools and the best way to maximize those tools for tax savings. 

Nils Larsen can help you determine what your retirement needs are, help you account for inflation, and help you understand how taxes will work based on different saving and investing methods. It is always recommended that you start planning and saving for your retirement as soon as possible. If you haven’t already done so, now is a great time to start. Reach out to Mr. Larsen today to get started planning for your future retirement goals. 

Pro’s and Con’s of Buying Two-wheeler Insurance Online

Buying bike insurance isn’t as hectic as it used to be. Today, you can purchase a policy of your with just click of a button. However, it is equally important to weigh the cons of online purchase. In this article, you will find out the advantages and disadvantages of buying two-wheeler insurance online.

Every bike driver knows the importance of two-wheeler insurance. It is unsafe and illegal to drive a bike which is not covered by a two-wheeler insurance plan. A bike insurance plan covers the policyholder against a variety of threats, including natural and human-made calamities like earthquake, flood, terrorism, riot, etc. A two-wheeler insurance policy also covers the policyholder against accidental damage.

Mainly, bike insurance is available in two types- Third-party insurance and Comprehensive insurance. Third-party bike insurance covers the policyholder against damages caused to third-party property. However, it doesn’t include the policyholder’s bike. A comprehensive policy covers the insured person’s bike as well as the third-party property. Therefore, many experts recommend comprehensive bike insurance over third-party bike insurance.

Today, several people prefer buying two-wheeler insurance online but there a few people who still prefer buying an insurance policy offline.  

With that in mind, here are some pros and cons of buying two-wheeler insurance online-

– Pros

  • Compare Offers

An individual can choose from a variety of policies online. The Internet makes it convenient for policy buyers to compare prices, features, benefits, and customer reviews of multiple insurers. By reviewing policies online, a customer can select the most affordable two-wheeler insurance plan.

  • Select a Cost-Effective Plan

A policy buyer doesn’t need a broker in case of online purchase. Hence, he/she can save on the agent’s commission. At the same time, insurers too can save on overhead costs. Therefore, the entire procedure becomes cost-effective. This leads to lower premiums for customers.

  • Save Time

While online insurance purchase helps a customer save money, it also reduces the time required to buy a policy. It is one of the reasons why many individuals prefer to buy two-wheeler insurance online. Also, a customer can complete the transaction process at any time as most online insurance portals are active 24×7.

  • Renew Policies Easily

Whether a customer wants to buy a policy or renew an existing plan, he/she can do both online. It is another significant benefit that insurance companies provide to their customers.

  • Select a Plan Based on Your Needs

When you buy a policy offline, you will have to deal with a middleman or an insurance company’s salesperson. To increase their profits, these individuals may guide you into buying a product you don’t need. However, you can avoid this hassle by purchasing a policy online.


  • Unfamiliar Terms

Most of the customers are unaccustomed to insurance terms. These unfamiliar terms and clauses can confuse policy buyers into purchasing the wrong product.

  • Online Scams

Online scams are one of the reasons why most customers don’t prefer online purchase of insurance. However, to make sure that a policy is authentic, a customer can reach out to the insurance company before paying the premium.

Now that you know the merits and demerits of buying a policy online, you can consider them before purchasing two-wheeler insurance.

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].

* * *

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.