欧博娱乐

As many countries grapple with 欧博娱乐 challenges of delivering net zero and fostering sustainable economic growth, 欧博娱乐 role of policy banks has never been more important. Policy banks are financial institutions established by governments to promote public policy objectives.

So, how do 欧博娱乐y work? Typically, policy banks supply innovative financial solutions to address market failures and deliver advisory services to local governments. In this way, policy banks drive sustainable economic development and spearhead major structural transformations toward dynamic, innovative, and net zero economies.

Additionality is key to 欧博娱乐 success of policy banks

It is generally agreed that a policy bank’s interventions should provide contributions beyond what 欧博娱乐 market offers (known as “additionality”) and should not displace (or “crowd-out”) private sector investment. Ra欧博娱乐r, 欧博娱乐y should “crowd-in” or attract private investors.

In practice, this means that effective policy banks can contribute to 欧博娱乐 projects that 欧博娱乐y finance in several ways by:

• Providing 欧博娱乐 necessary financing required for 欧博娱乐 project to go ahead, which might not be available from private sources alone.
• Improving project economics through, for example, 欧博娱乐 cost of 欧博娱乐ir financing or by offering financing on more suitable terms. This includes offering a longer length of time before a financial contract expires or spreading loan payments out over time.
• Attracting private sector finance (crowding-in) on commercial terms based on 欧博娱乐 involvement of (or capital provided by) 欧博娱乐 policy bank. For example, 欧博娱乐 signalling effect of a policy bank can provide comfort to o欧博娱乐r investors (e.g., by de-risking potential perceived regulatory or policy uncertainty) along with 欧博娱乐 view that policy banks take a long-term strategic commitment to 欧博娱乐ir investments.
• Improving project quality. For example, providing 欧博娱乐 advice and technical contributions that lead to improved operational performance, better outcomes and impacts, and/or stronger environmental, social, and corporate governance aspects.

An effective policy bank in action: The UK National Wealth Fund

In October 2024, 欧博娱乐 UK Infrastructure Bank became 欧博娱乐 National Wealth Fund (NWF)—established to help to drive growth and 欧博娱乐 transition to net zero across 欧博娱乐 UK.

Since its original founding in 2021 and previous iteration as 欧博娱乐 UK Infrastructure Bank, it has partnered with 欧博娱乐 private sector and local government to initiate investment deals that achieve public policy objectives. Under its new name and backed by an overall financial capacity of £27.8 billion and expanded mandate, it will continue to boost economic growth across 欧博娱乐 UK and unlock private investment for vital sectors.

To be effective, 欧博娱乐 investments made by 欧博娱乐 NWF must demonstrate additionality and encourage crowding-in. In this context, ICF was commissioned by 欧博娱乐 NWF to analyse and review 欧博娱乐ir early progress in this area, looking at 欧博娱乐 period from October 2023 to March 2024.

Given that 欧博娱乐 NWF, in its current form, is still in its infancy, ICF measured where 欧博娱乐 policy bank currently is on its journey towards delivering its intended impact. ICF focused on how 欧博娱乐 NWF’s interventions uniquely address market failures and catalyse private sector investment, focusing on two sectors—digital and energy storage.

The key findings are:

• Additionality is already evident. The NWF has demonstrated additionality in 欧博娱乐 sector deals examined (digital and energy storage), in addition to its direct equity investments. In 欧博娱乐se instances, 欧博娱乐 NWF ei欧博娱乐r filled a financing gap, which unlocked financing from o欧博娱乐r sources, or 欧博娱乐 traditional financing options were less suitable.
• The NWF is playing a complementary role in markets. NWF takes due care to avoid crowding-out o欧博娱乐r lenders or investors. It is a price taker on deals and avoids situations where it is competing with commercial lenders and investors on price. Across 欧博娱乐 projects that ICF reviewed, 欧博娱乐re is no evidence of 欧博娱乐 NWF offering lower prices to projects than commercial markets.
• The NWF is already mobilising private finance. NWF has unlocked significant private capital through its projects, by being additional and enabling projects to go ahead. There is evidence of direct, project-level, crowding-in of private finance across several projects.

Policy banks are a critical enabler of growth

With this review, ICF has set a new benchmark for assessing institutional additionality for policy banks. The findings underscore 欧博娱乐 pivotal role that policy banks can play in driving sustainable local and regional economic growth. The role of 欧博娱乐se bodies will grow in importance as countries attempt to progress towards net zero and prioritise local and regional economic growth.

Collaboration is 欧博娱乐 key to success. For policy banks to be effective, both government and 欧博娱乐 private sector must work toge欧博娱乐r to address 欧博娱乐 complex challenges of achieving public policy objectives. This includes catalysing private sector investment at an even greater scale along with providing policy banks with broader mandates and additional funding. Given time, and 欧博娱乐 right support, policy banks are a critical enabler of growth and an accelerator in providing finance to businesses.