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G20 Panel for Multilateral Development Banks’ Capital Adequacy Frameworks

The G20 launched an Independent Review of MDBs’ Capital Adequacy Frameworks. Frannie Léautier will lead a Panel of 13 experts

October 15th, 2021

G20 Panel for Multilateral Development Banks’ Capital Adequacy Frameworks

The daunting financing needs of developing countries, estimated to be around USD 450 billion over the period 2022-2025 due to the COVID-19 crisis, require that scarce public resources be deployed at full potential. Accordingly, Multilateral Development Banks (MDBs) have a critical role to play in providing affordable financing to support economic recovery and to help achieving Sustainable Development Goals in a post-pandemic context. MDBs’ scope to leverage shareholders’ capital contributions to provide such financing is determined by their Capital Adequacy Frameworks (CAFs), which, during the current crisis, have partially constrained MDBs to go further in supporting their clients’ recovery.

In July 2021, the G20 Finance Ministers and Central Bank Governors agreed to launch an Independent Review of MDBs CAFs. This exercise aims to shed light on the current status of MDBs’ capital utilisation and to provide guidance on how to assess their capital metrics and indicators in a consistent manner while preserving current credit ratings, preferred creditor treatment and MDBs’ governance arrangements. The Review would also benefit MDBs’ shareholders and management through an improved, shared understanding when discussing capital adequacy and capital utilisation at each individual institution.

The Review is complementary to the existing MDBs Balance Sheet Optimisation work, which is important to maximise the development impact of existing capital and mobilise additional private financing.

To conduct this Review, the G20 International Financial Architecture Working Group (IFA WG) selected an Advisory Panel of 13 members and appointed Frannie Léautier as Expert Chair. Dr. Léautier, Senior Partner at SouthBridge Group and CEO of SouthBridge Investments, is a well-known finance and development expert, with long-standing global expertise in leading and transforming organisations in the private, public and not-for-profit spheres. Dr. Léautier brings a wealth of experience from senior roles in multilateral organisations, having worked at the World Bank Group, African Development Bank and Trade and Development Bank. She has extensive governance experience holding advisory and governance roles on several boards including the United Nations Foundation, Norsad Finance and the Overseas Development Institute. Dr. Léautier holds a Masters and PhD from the Massachusetts Institute of Technology and an honorary Doctor of Law from Lancaster University.

The Expert Panel is composed of outstanding experts with different backgrounds and from different institutions. The Panel includes Ahmed Al-Mohsen, Paulina Beato, Chris Humphrey, René Karsenti, Ekrem Keskin, Hans-Peter Lankes, Nancy Lee, Mike Muldoon, Hiroshi Naka, Betsy Nelson, Arunma Oteh, Jens Ulrich and Jinkang Wu. 

The Review will avail itself of technical support from the Basel Committee on Banking Supervision and of the input from external experts, MDBs and Credit Rating Agencies (CRAs). 

The Review will be totally independent from G20 members, MDBs and CRAs, and will produce its report and recommendations by mid-2022.