World Bank Leaps Forward to New Era of Innovative Products, Leading Services, and Sustainable Markets: Five Leap Days Later
On this day twenty years ago, the World Bank Treasury helped the global capital markets leap forward by announcing one of its first e-bonds. Today, the World Bank looks back on the twenty years—across five leap days—that has spanned the development of innovative products, delivery of cutting-edge services, creation of new sustainable markets, and brought us to a new era in development finance.
Responding to Investor Needs and Creating New Market Platforms
In 2000, the World Bank launched the first-ever fully integrated global electronic bond offering via the Internet. The Bank was one of the first to spend time with investors to come up with innovative products that met investor needs. In 2018, the World Bank issued bond-i (blockchain operated new debt instrument), the world’s first bond to be created, allocated, transferred, and managed through its life cycle using distributed ledger technology.
Supporting the Private Sector by Creating Blueprints for New Markets
Since issuing its first Sustainable Development deposit in 2005, the World Bank every year issues billions in Sustainable Development Bonds to support women’s and girls’ empowerment; promote investments in the health and nutrition of women, children, and adolescents; and raise awareness for the Sustainable Development Goals (SDGs). For many bond investors, World Bank bonds are an entry point to investing for impact. The World Bank continues to catalyze opportunities for fixed income impact investing—including pioneering the green bond market in 2008 and promoting the integration of environmental, social, and governance (ESG) criteria for investment decisions.
Leveraging Markets for Emerging Economies to Finance Risk
Investors in World Bank catastrophe bonds enable countries to manage the financial impacts of earthquakes, hurricanes, pandemic disease outbreaks, and other disasters. It issued $1.36 billion in earthquake protection to Chile, Colombia, Mexico and Peru, making it the largest sovereign risk insurance transaction ever and the second largest in the history of the catastrophe bond market. Since issuing its first cat bond in 2004, the World Bank Treasury uses this experience to provide technical assistance to countries to build capacity for disaster risk transfer.
Building Asset Management Capacity in Public Sector Institutions
Established in 2001, the Reserve Advisory and Management Partnership (RAMP) now serves over 70 members and is an innovative platform for delivering demand-driven capacity building and asset management services to official sector asset managers. It helps central banks, pension funds, and sovereign wealth funds build human capital, and strengthen governance and operations in developing and many in low-income countries with fragile and conflict-affected situations.
Serving as the Infrastructure for $7 Trillion in Annual Cash Flows
The World Bank Treasury manages over $7 trillion in 130 currencies through 1,800 bank accounts in 184 countries each year. It maintains relationships with nearly 400 banks, and supports all business operations by minimizing operational risks for borrowing and investment activities. For decades, it has also managed collateral to mitigate counterparty credit risks for the World Bank’s $600 billion derivatives portfolio used exclusively to hedge out interest rate and currency risk from its balance sheet.
Maintaining Safe Haven Asset Status in an Era of Uncertainty
The World Bank, comprised of the International Bank for Reconstruction and Development (IBRD) and International Development Bank (IDA), maintains triple-A ratings, continues its track record of prudent financial and operational management, and offers investors the opportunity to invest for impact. Since issuing the first bond by a multilateral development bank in July 1947, the World Bank (IBRD) has issued over 11,000 bonds denominated in over 70 currencies—totaling over USeq$900 billion. In 2018, IDA debuted in the global capital markets, and leverages an unrivaled capital position—the largest equity of any multilateral development bank. IDA has the power of capital markets to tackle some of the world’s biggest challenges and help millions lift themselves out of poverty. In early 2020, IDA debuted in sterling with a successful GBP 1.5 billion five-year benchmark bond.