A Market for Brown Assets To Make Finance Green

January 20, 2023

Preview Citation

Format: Chicago

Domenico Fanizza, and Laura Cerami. A Market for Brown Assets To Make Finance Green, (USA: International Monetary Fund, 2023) accessed December 23, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper proposes a market solution to enhance the role of the financial sector in the green transition. Developing a secondary market for “brown exposures” can allow banks to dispose more quickly of stranded assets thereby increasing their capacity to finance green investments. Furthermore, newly created instruments – the brown assets backed securities (B-ABS) - can expand the diversification opportunities for specialized green investors and, thus, attract additional resources for new green investments. The experience of the secondary market for non-performing loans suggests that targeted policy and regulatory measures can simultaneously support the development of the secondary market for brown assets and green finance.

Subject: Climate change, Climate finance, Climate policy, Environment, Financial institutions, Financial markets, Nonperforming loans, Securities markets

Keywords: Climate change, Climate finance, Climate policy, Europe, Experience of the secondary market, Financial innovation, Financial sector, Global, Green finance, Green transition, Greenium, Market solution, Nonperforming loans, Policy simulation, Securities markets

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/011
Stock No:

WPIEA2023011
ISBN:

9798400231414
ISSN:

1018-5941

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