Today, Global Alliance for Tax Justice’s European Network member Eurodad published a new report on public development banks, entitled “Public development banks: towards a better model”.
The report draws on a wide range of existing research and finds there are four main roles that public development banks (PDBs) can play to improve the impact of the financial sector on development:
- To direct finance – or provide it on better-than-market terms – to sectors or regions that are important for a national development plan.
- To build the financial sector, either by filling gaps in the supply of credit (lending to households or businesses that cannot access credit from commercial banks), or by helping to create demand (helping businesses or other customers to develop bankable projects).
- To promote economic stability, by playing a counter-cyclical role, to ensure a supply of credit when a financial or economic crisis causes the commercial financial sector to seize up.
- To improve standards, by insisting on, for example, social or human rights safeguards in the projects or institutions they finance.
The report proposes a framework for an “ideal” PDB based on four pillars:
- Strong development mandate
- Operational strategy;
- Financial sustainability;
- Good governance.
Eurodad wrote an opinion piece “The ideal development bank. A blueprint” in Public Finance International. Eurodad’s partner Counter Balance also published a blog about the report. Please find it here.