Triggering Green Transformation of the Private Sector Through Central Bank-led Initiatives: The role of Bangladesh Bank in mainstreaming green finance in Bangladesh

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August 2018
Authors: 
Bushra Ferdous Khan
Source: 
UK Aid Direct, Economic Dialogue on Green Growth (EDGG)

This paper presents a diagnostic assessment of the initiatives undertaken by Bangladesh's central bank to disburse green finance to the private sector. It also proposes a functional conceptualisation of the term "green finance" for the national context, and spells out a number of recommendations for triggering a green transformation of the private sector through central bank-led initiatives in Bangladesh. These include: 

  • Shifting from a supply-driven approach to a demand-driven  strategy for disbursing green finance
  • Developing a functional conceptualisation of the term "green finance" that includes:
    • A definition that guides practical application;
    • A new method of categorisation that creates room for acknowledging the fact that demand for green finance by different segments of the private sector (private businesses and household level consumers) has different drivers;
    • Identification of the drivers of expenditure on green solutions by private businesses and consumers that subsequently create private sector demand for green funds.
  • Designing a targeted approach that centers on compliance with regulations or potential for economic gain, given that the central bank has little to no influence to drive an uptake of green solutions through intellectual or moral imperatives. 
Countries: 
Bangladesh
Sectors: 
Finance