Two key Lab proponents, the Green Guarantee Company (GGC) and The Currency Exchange Fund (TCX), were featured in a recent Impact Investor article on the role that green guarantees can have in filling the climate finance gap.
The GGC, featured in the most recent Lab cycle, was highlighted for its forward-looking vision on providing guarantees for climate bonds in developing countries and its potential to be a strong de-risking mechanism that can catalyze investment. The instrument has made headlines in recent months with USAID Administrator Samantha Power announcing the GGC would be one of the first beneficiaries of the Enterprises for Development, Growth, and Empowerment (EDGE) Fund at the World Economic Forum in Davos. The GGC has been approved for an initial USD 40.5m of equity investment by the Green Climate Fund (GCF) that it will use to mobilize more than USD 1.6bn of climate finance in the GCF’s host countries.
TCX, one of two proponents for the Long-Term Foreign Exchange Risk Management instrument from the Lab’s 2014-2015 cycle, provides solutions to currency risks and protects the financial stability of borrowers in emerging market. The company announced in December the European Union (EU) had approved EUR 325.75m in financial guarantees that was followed up with an additional EUR 80 million in January, bringing the EU’s total contribution to TCX to an estimated EUR 570m. This influx of capital will be leveraged to make currency risk protection more affordable.
Check out the full article here.