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Green finance heats up

July

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At 33.9 degrees Celsius, 21 June was the hottest day in the UK since 1976, in a year that so far has been the hottest ever recorded on earth.
Earlier in June Donald Trump withdrew the US from the Paris climate agreement. Governments and the public have long debated the
importance of climate change, but public and private investors too are getting the chance to invest more sustainably as the green finance
market grows.

Bertrand de Mazières of the European Investment Bank (the first institution to issue a green bond) and Antony Karembu of the African
Development Bank set the scene in this month’s green finance-focused edition by exploring what it means to be green and tracking the
development of the market. Robert Scharfe outlines the importance of building standards. Despite the lack of a fully developed market, our
list of green-related deals of 2016-17 shows impressive expansion. This growth will not be curtailed by the US withdrawal from the Paris
agreement, according to 68% of respondents to this month’s Advisers Network poll. One important area of expansion is Africa, where green
bonds have the potential to transform the economy, writes Jeremy Wakeford.

Evelyn Hartwick of the International Finance Corporation draws attention to the challenges facing official institutions in supporting the development of the green market. Ulrich Volz highlights the importance of climate change to central banks in the light of potential risks to financial stability. Alexander Barkawi similarly argues why monetary policy should go green. Danae Kyriakopoulou applauds Dieter Helm’s attempt to deploy economic principles in the area of conservation in her review of Natural Capital.

In our second book review Vicky Pryce takes a balanced view of Greece’s former Finance Minister Yanis Varoufakis’ fascinating but one-sided
account of euro area negotiations in Adults in the Room. Theresa May seems to have learnt a lesson or two from Varoufakis’ bad experiences
and is softening her stance following the start of her own negotiations with the EU in June. But her offer to guarantee EU citizens’ rights lacks
substance, according to Danae Kyriakopoulou. One year on from the referendum, the UK looks weak compared with a revived EU. Jean-Jacques
Barbéris outlines French President Macron’s plans to boost the economy through technology and innovation.

Franco-German co-operation is getting stronger and was even fortified by the death of former German Chancellor Kohl, writes David Marsh.
In his obituary, Marsh remembers Kohl as chancellor with a down-to-earth economic approach. The European Central Bank will be an important
part of the future of Franco-German accord. Marsh argues that Germany’s Jens Weidmann, Bundesbank chief, should aim to become the euro
area’s first finance minister and leave the role of heading the central bank to France’s François Villeroy de Galhau when Mario Draghi’s term
ends in 2019. Ben Robinson discusses the difficult choices the ECB faces on the future of quantitative easing.

In the US, the succession race for Janet Yellen’s post has begun. Darrell Delamaide assesses the rumours of who might replace her, if at all.
Whoever is in charge, the world’s major central banks will face a difficult task deflating their balance sheets according to the latest edition of our collaboration with Narodowy Bank Polski by Pawel Kowalewski and Ben Robinson.

Central banks elsewhere are scaling back from monetary expansion. Donald Mbaka outlines the priorities for the Central Bank of Nigeria.
In a conversation with OMFIF’s Ben Robinson, Banco Central do Brasil’s Deputy Governor Tiago Berriel highlights the challenges but also
opportunities from Brazil’s changed economic and political environment.

Click here to read the press release.