1. Themes
  2. MDB Reform
  3. MDB Risk Appetite

MDB Risk Appetite

The 2022 Capital Adequacy Framework recommendations called on MDBs to increase their risk appetite and prioritize providing finance over shielding credit ratings.

2030 Goals

01

MDBs work with lower-rated financial institutions and increase their risk appetite in general, reflecting the need for public institutions to absorb more risk to mobilize private capital.

Status

Moderate Progress

The CAF recommendations called for the MDBs to prioritize providing needed finance over protecting their credit rating, including working with banks with lower credit ratings and taking on more first-loss financing. While the new WB presidency has supported the idea in theory, movement forward has been slow. ADB, EBRD and IDBG have implemented adjustments on their prudential level and risk appetite regarding the adequacy policy.

Leading Actors

Cooperation is required between these actors and audiences to drive progress foward in MDB Risk Appetite.

Multilateral Development Banks

African Development Bank (AfDB)

Multilateral Development Banks

Asian Development Bank (ADB)

Multilateral Development Banks

Asian Infrastructure Investment Bank (AIIB)

Multilateral Development Banks

Council of Europe Development Bank

Multilateral Development Banks

European Investment Bank (EIB)

Multilateral Development Banks

European Bank for Reconstruction and Development

Multilateral Development Banks

Inter-American Development Bank (IDB)

Multilateral Development Banks

Islamic Development Bank

Multilateral Development Banks

New Development Bank (NDB - BRICS Bank)

Multilateral Development Banks

World Bank

Alliances

G7

Alliances

G20

Alliances

BRICS

Supportive Stakeholders

Center for Global Development

Supportive Stakeholders

E3G

Supportive Stakeholders

MDB Reform Accelerator

Key Milestones

Showcasing the key reform milestones for MDB Risk Appetite that have been addressed at global events.

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Washington DC, US

WBG/IMF Spring Meetings

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  • Credit Rating Agency Cooperation

    MDBS, credit rating agencies, and relevant CSOs discuss strategies to align credit rating methodologies with climate and development priorities, improving recognition of MDB-backed projects and reducing the cost of capital for EMDEs.

  • MDB Risk Appetite

    MDBs agree to explore ways to expand MDBs’ risk-taking capacity to support higher-impact climate, infrastructure, and just transition investments while maintaining financial sustainability.

Learn More

Publications and educational material to deepen understanding of MDB Risk Appetite.

How callable capital can be used to grow MDB lending capacity

MDB Risk Appetite

The callable capital of the World Bank and other multilateral development banks is the ultimate unknown quantity — but it shouldn’t be. An article by Devex.

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