 Hello, everyone. Welcome to this event on recovery while fostering sustainability and resilience, financial sector development in the age of COVID-19. It's my great pleasure to welcome you, and I promise you a very interesting and lively debate over the next 90 minutes. So this webinar is part of the event series organized by the SOAR Center for Stenal Finance, where I am located. The E3G think tank, CSEN, and the Bennett Institute for Public Policy. We are looking at the effects of the crisis and how to respond to the crisis in a sustainable way. And today we will be looking at financial sector development. And actually, sorry, I forgot to introduce myself. I am Uli Volds, I'm the director of the SOAR Center for Stenal Finance at SOAR University of London. And so I think the topic we are discussing today is a very pressing one. The COVID crisis has caused huge trouble around the world, but the impacts have been the worst arguably in developing countries. And the figures we are seeing from the World Bank and others show that there are already big impacts on poverty, gross progress that has been achieved over the past decades has partly been wiped out. And so there is a real danger that the development successes we've seen will be reversed and not only short term. And so we do need to think about how to help countries to grow back. Everyone asking about a green recovery sensor on, but we do need also to make sure that there is sufficient finance to do that. And so there is an important role for the financial sector, also in stabilizing the situation. But there's arguably also a very important role for public development banks. And so this is a background against which we want to discuss today. A number of questions relating to financial sector development and also consider what are the lessons that we may draw from the present crisis and of course also previous crisis. And in how to shape future policies. And I'm most delighted that we have an excellent cast speaker. So today, we will first have a keynote speech by Remy Ryu, who is the CEO of Agence Français Development. We will then also have Shamshad Akhtar, who is the chair of the board of directors of Karanda's Pakistan, and former governor of the central bank of Pakistan. And also former finance minister and she's also had many senior positions in the UN and at the World Bank. We will also have Stephanie Griffith Jones, the financial markets program director at the initiative for policy dialogue at Columbia University. And Marian Haak, who is the executive director of the Green Digital Finance Alliance. Sony Kapoor, who is managing director of the Nordic Institute for Finance, Technology and Sustainability, and also known in his capacity as a really fine. But before I invite the other speakers to jump in, I, it's my great honor to ask Remy to give a keynote and so Remy is not only the CEO of IFD. He is also the chairman of the International Development Finance Club. And also very importantly, he will be chairing in November from 9 to 12 November, the finance in common summit in, well, Paris or kind of virtual Paris. I for one would love to go to Paris right now that, well, next year hopefully. And so this is a, this will be a very important summit. It is the first global summit of public development and so it will be a place where a lot of important issues around development of finance will be discussed and so it's really great that we can have in the run up to that this discussion. I hope there will be some good ideas coming out of this that Remy can then take forward. Without further ado, I would like to invite Remy to deliver his keynote speech and I'm very, very much looking forward to this. Thank you for being with us and despite your super busy schedule. Remy, the floor is yours. Thanks a lot, Oli and it's a pleasure and a honor to be to be with you all. And also to share this this panel with with friends and people that are helping us so much to prepare this finance in common summit. Yes, of course, I will, I will maybe explain the role of public development banks but the name we choose for the summit is is finance in common. I would like to thank Remy for explaining what could be the best role the best positioning for the public financial institutions with the other with the other actors and to, to help, of course, finance the response to the crisis, as well as the transition. Thanks a lot to to the organizers of this webinar to give us the opportunity to give me the opportunity to put the summit in a broader perspective and and to to see the big picture to think big. And I certainly count on the exchange we will have today and the questions from the audience and and the good ideas to unleash the full potential of what what we are what we are building together. Because this is the financial system as a whole that we have to reorient and it was the case before the crisis, of course, but this urgency is only reinforced by it with a special case, of course, for developing an emerging economy but but again not developing an emerging economies by themselves, but in their relationship with the rest of the world and the rest of the financial system. Because of course we have this risk of decoupling that this tale of two cities that Cristalina Georgieva stressed during the last IMF and World Bank annual meetings and the impact of COVID-19 could be worse, of course, in developing an emerging economies than in advanced economies because these countries face multifaceted crisis of course massive decline in commodity prices stemming from a simultaneous supply and demand shock disruptions in supply chains reduced exportations and the need to implement containment measures domestically and many of these countries where we all know that they do they do lack the they lack the fiscal space to deploy large fiscal packages to address the current economic shock. And of course, because of this situation in the real world, the impact on the financial system and on financial institutions can also be severe. It will come from the damage to the real economy, of course, increase the, the sequences bankruptcies sector specific shocks tourism transport, as well as a potentially long global recession, and it will come from a financial shock. I mean, high volatility, unexpected market moves, flight to quality, all these events disturbing what was progressively built in the global south in terms of sound financial markets and of course, since March, we have already seen very large movements, disturbing movements from investors, especially having fled from from emerging markets and then when we when we go at the level of individual financial institutions, the impact are multiple as well. Massive asset quality deterioration, liquidity and solvency tensions need to support your clients clients while managing your your risk and easing treasury pressures. And of course, for an institution like AFD, the fear of an eviction risk from sustainable commitments, because of, because of the, the urgency so there was this nice move on going, going green and sustainable that we see, and then injured by the situation so that that's that's maybe in broad lines, the challenges for the financial system in developing an emerging economy at the same time. We all know that part of the answer lies in the in the financial system and in its reaction to the crisis. Of course, we have to do our best everywhere to maintain liquidity in in the system and avoid avoid the chain reactions of bankruptcies and exclusion of venerable clients. So this is the role, of course, of central banks and governments with the fiscal capacity and we see a lot of a lot of action on this side, including I was with President Makisal of Senegal a few a few days ago, including in in countries in in Africa, taking strong measures to protect their their SMEs. We will have a specific high level event during the summit to protect African SMEs and join forces for for for that. So that that's that's a key part of the equation, of course, to keep companies and populations above the line, I mean, alive. And then, of course, at the same time, the second role of the financial system is to is to invest in rebuilding a more resilient economy. And this spur of investments of is absolutely essential, and it has to go hand in hand, quantitatively and qualitatively. And that's the challenge right now when we see this this 12 trillion dollar combined stimulus plan worldwide. What are we doing with these resources and are they consistent with long term trajectories. We are beginning to design following the guidance of the Paris Agreement article to one see we decided five five years ago. And so all this liquidity around at the time it has to land into a concrete investments project and better this landing goes in the right direction than on the other usual usual side. And good news is that it's clearly in a debate. I was, as I said, just I just closed before joining you the IDFC annual meeting, and we were for three hours discussing SDG alignment and climate finance, of course, which was at the heart of what this club is providing the the largest provider of climate finance by far in the world. $200 billion a year. And it's fascinating to see how all these institutions are thinking about our experiencing our developing tools are thinking on how to to help other categories of actors to to align with Paris and now that the social dimension has come so strong in the debate because of climate but because of the crisis as a whole to align with with SDGs. So this is where I come to the role of public development banks. My understanding of the issue is that we missed we so dearly missed the public development banks for for I don't know maybe three decades. It's not saying that they are not there and that they are not playing their useful role everywhere, but of course they're still, they're still a bias or maybe a stigma attached to these to these instrument and and thanks to Stephanie thanks to all the other academics that are helping us building this research conference called the visible hand that will take place nine cents of of November and also in a week. And Joe Stiglitz will be there next term. Mariana Mazzucato. You Stephanie Masoud Ahmed the DIMF is producing a paper on this that's very significant and and hopefully it will help challenge of course public development banks but also more clearly identify what is their added value. What is their role in the financial system, of course, with we again with the other actors, and probably if we succeed in correcting these views and and setting the right policy recommendations to for these institutions to play their positive role, then we'll come out of the finance income and submit a sense and of community, and a coalition of all these institutions that could then enter in a dialogue with the other coalitions and we know of course what governments are doing. We know what NGFS now is providing on the on the central bank side, we know what IIF is providing and probably for now the field of public development banks was too fragmented for our group, our community to enter in a positive and at the right level discussion with with the other. When I say our group, you know that we will publish again the ninth of November database built with the University of Beijing. So just for for the audience, we have identified 452 public development banks, meaning institutions owned by the government, institutions that have a balance sheet, so that are financial institutions and institutions that are following a development mandate. So not non commercial with investing long term embarking sustainability issues. So these hundreds of institutions amount to nearly 12 trillion combined balance sheet and and they are providing a 2.3 trillion dollar a year financing and they're quite nicely balanced between the regions they are, of course a lot in about 150 in Asia and the Pacific, that's the largest region 102 in Europe, 100 in America and and and 95 in Africa. And, and of course, their size is different, but you have a strong basis in each region on which to expand because of course the figures I was referring to are for 2018. They are the last known for all these institutions, but you can suspect that in 2020. Alas, these figures we will have drastically expanded because of the counter cyclical role these institutions are playing right now we see that in each and every member of the IDFC we see that at the multilateral development banks level as well including in poor countries. And probably we can do more, of course, because the sometimes the loan to ratio of these institutions is rather the gearing of these institutions is rather conservative. And so if pushed by our shareholders probably we can do more. And at the same time, again, this is one of the places in the financial system where we are feeling we are like sensors of distinctions between between the goals the various sustainable development goals and places where we are inventing methodologies to. Verify that what we are producing in terms of financing in this consistent with the international agenda in terms of in terms of quality so please help us. Make this voice of public banks emerge it's not it's not it's not about public banks is not it's not for ourselves. It's just that I have the conviction that if this voice is not heard in each and every financial system at the right level intensity with the right bridging capacity between public and private between short term and long term between international and local between liquidity and projects. Probably, again, that's something that's something missing. So we will try to demonstrate this from the ninth to the 12th of November you can register online. Well, you still have a few hours probably to do that so you're most welcome and then have your views on the easy. Is it convincing enough and what's the echo of this with the rest of the of the financial systems and then if convinced if strong enough probably there will be sequels over time of this initiative. Probably we will enter in a more structured and and and positive dialogue with the other stakeholders again central banks. Again society private finance foundations trade unions there are lots of linkages that have not been yet fully explored and hopefully. At least so there will be a joint declaration of the whole community quite ambitious because I feel that there's a deep, deep consensus in the group, regardless of our constituencies, of course with differences but these institutions they have all heard loud and clear the 2015 message. And they try to demonstrate that it is possible. And the good news is that this message that started at the multilateral level of course turn international regional and now it has reached national national entities sub national entities. I was yesterday on another webinar with my friend the head of the bank of Minas Gerais and that was I was so struck by what he is experiencing in his bank on sustainable development alignment. Very innovative very very powerful and this is what you found with so many brilliant fantastic CEOs guiding their institution in a very clear and collective collective way. So maybe I don't know probably I exhausted my time I can tell you about AFD what we are doing but best way is probably to turn to to Marianne Shamshatsani, Stephanie under your guidance and then come back if there are questions. Thank you very much for me for very thoughtful remarks and I think it was very important that you highlighted that it's not only the quantity of financing. We need to see and of course we need to scale up financing given the challenges. And not only the challenges from the COVID crisis but also we must never forget that we are in the midst of a climate crisis that just by itself would require us to massively scale up financing and adaptation and mitigation. But it's not only quantity, it's also quality that matters and I think. So you've highlighted that development bands, DFI's are now also really trying to align their portfolios with the Paris Agreement and and I mean personally I think this you know this could have been a little bit quicker but I think this is this is now underway and this is really important. And also I think the point about the counter cyclical role of public development banks is the point that can't be repeated often enough because so often in development finance when we talk about private capital. It tends to be in abundance there in abundance when when you know things are going well but when things are not going well. Private capital often tends to retreat and that can often make things even worse. Let me invite now Shamshat. So Shamshat, as I mentioned, is the chair of the board of directors of Karanda's Pakistan and also has been in development and also inclusive finance and from a role set, the central bank in Pakistan, finance ministry, vice president of World Bank and so on, and the executive director of the UNS Cup in Bangkok and so I'm keen to hear your takes, you know, what are the pressing issues, you know, what are the main things to take care of now. Shamshat, the floor is yours. Thank you Lee and thanks to Remy for a very thoughtful presentation. First of all, we have been discussing among the group a lot about the debt issues that confront globally. I think the first and foremost thing is to recognize the size of the bill that we have to foot when it comes to sustainable development goals. And so everybody knows that various estimates exist, but we're talking about five to seven trillion per year. And within that for the low income countries we are talking about two and a half trillion. The reason and IMF has estimated that the emerging markets require 4% of GDP, while no income countries have an even more daunting bill as high as 15% of GDP per year. And one has to recognize that only one third of it is being financed, going to be financed and is being financed by the private sector. So clearly, public sector has a role to play, public sectors of the national governments, public sector at the international level, the official development role and the G20. So what is the one major thing that needs to be done to jumpstart the sustainable financing at a time when the progress in sustainable development goals has not only been slow pre-COVID, but there is a risk of it being stalled in at least the low income or even developing countries because of the preoccupation that we all have to have for the recovery at this point with such sharp steep economic contraction. So there was a hope if you actually look at the sustainable development goals and the sustainable financing architecture of the Aresa Baba, that there was tremendous hope that countries would be able to leap forward on their domestic resource mobilization. And in the initial days when I was in the UN, we were thinking, okay, we need to have a target in the developing countries close to raising the tax GDP ratios or all revenue GDP ratios to 22% of the GDP. Now, that has been dashed not only pre-COVID because countries didn't lift their ambition on the domestic resource mobilization, the ones that needed to do, but also because of the COVID-19. There has been major distractions. So the fiscal or the monetary modules of the country are totally focused in a rescue mode for COVID. Before I get into the actual description that I have, I'd like to take a moment to talk about that the central banks of the emerging markets and developing countries, despite the fact that they have responded so decisively and effectively, and have deployed a range of policies and tools to incentivize businesses and financial institutions to revive and stimulate economic activity. It has to be acknowledged that these policies are largely surrounding, of course, the Liquidity Support Initiative, which is support for short-term funding. So SDGs need long-term funding. Counter-cyclical potential measures through relaxation of the regulatory and supervisory requirements, including capital buffers is another area where work has gone in. Now, that's an area where which could have been tapped for climate finance as well as for SDG financing, but right now it's serving social safety measures. Borrow assistance is another component which includes government-sponsored credit lines or liability guarantees to promote flow of credit to household and firms. So one wonders with so much of concentration on that side, how much will come for the sustainable development goals. And of course, monetary policy includes policy rate and quantitative easing, which has managed to support economic revival. The big concern I have is that this is the first phase of COVID, which has taken everything that was on cards in the emerging markets and the developing countries. And this is not the United States we are talking about, where the firepower is much larger. These are very small numbers that we are talking about. Now, luckily we do have financial stability of certain order, but sector vulnerabilities within the financial sector are a worry. And I'm talking about the analysis that I have looked at of the various countries' financial stability reports. The monetary policy easing clearly has also been unprecedented. It was unthinkable that emerging markets or central banks would go into asset purchase programs, but they have gone in too. There are implications, both medium term and long term, of this kind of monetary easing within the developing countries, because a lot of these developing countries operate in a fiscal dominance environment where a lot of the funding goes to support the fiscal deficit rather than exclusively sustainable development. So, great idea to have a public sector institution, which would bring sense hopefully with the funding that it has gotten, it gets. But one has to think about how to capitalize that institution at a time when resources are quite constrained. I would go back to some of the debates we have been having with Uli being the driving force at the sustainable finance center, along with other players. I think we have to look at a debt, G20 has to look at a debt release of a very different qualitative nature and a sizable one. And to possibly contemplate that sustainable development goals require sustainable recovery and sustainable financing. So in the initial phase, until the growth recovery emerges to allow to facilitate domestic resource mobilization, making sure that you enhance the envelope of the debt relief participation of all the creditors, and to make sure that the amounts that are released, the fiscal space created by that is directed towards green recovery focused on climate adaptation and mitigation in a more focused manner, because we think that the sustainable development goals have been interrupted by a pandemic with what climate crisis would do. So we are in a three-dimensional crisis, pandemic, debt crisis, as well as climate crisis glaring and it's already happening in our footsteps. Now, just to conclude, I wanted to make another point that with all the financial policies and monetary policy easing that has happened, there has to be very careful reflection on financial stability, but also more on the medium and long term effect of banking capital markets, insurance and asset management industry, because we are looking at financial sector in this dialogue. We're talking about moving from the old to almost a new normal and enhancement of capital and regulatory frameworks following the 2008 global financial crisis did leave the banks in good standing as we entered into COVID-19, but as we have entered into COVID-19, the debt crisis have totally, totally shattered the countries and also the banks are going to be on a weaker footing going forward because of the various schemes that have been noted on to them, the emergency funding loans, the standby liquidity through loan facilities, the corporate and household indebtedness has been rising and so and so forth, and lack of looking at the long term institutional funding. So I'm going to stop here, given that I was allocated five minutes and I think I have taken five minutes, although only smiling perhaps I think a bit longer, for which I apologize. Thank you. Thank you very much. As always very, very deep insight and thank you for framing the topic in this broader context and bringing in also kind of fiscal monetary policy and regulatory considerations which are of course very, very important here and highlighting the severity of the debt crisis, which is really one of the looming threats above all these policies. I would now like to invite Stephanie. Remy already mentioned that Stephanie has been at the forefront of working on development finance and among many other topics she's also been one of the major scholars working on the role of public development banks and development finance institutions and so very keen to hear your thoughts Stephanie. Thank you very much. I'm delighted to be participating in this panel and thank you very much for inviting me and so happy to be here with the inspiring words of Remy and also the other fellow panelists. So I want to start by focusing on the fact that we really need a very profound and radical transformation of the financial sector to make it more fit for its main purpose, which is to serve the real economy and the society, both in good times and in bad times in the short and in the long term. And I see really two main roles. The first one of course is channeling savings where there are excessive savings to productive investment in a cost-effective way. And this is of course particularly key in a moment when we have to make such a major structural transformation to a low carbon and inclusive economy, which of course will require major investment needs. And of course we knew that the transition to the low carbon economy was going to have very large costs, but on top of that now we have the fact that in developing and emerging economies we've had this major setback because of COVID and regions like Latin America and Africa, the UN actually estimates that about 15 years or 20 years of the major progress achieved in, for example, social sectors in health and education have been tragically reversed. So we have an additional major challenge. And I think that we have learned through crises and in normal times that the private financial sector on its own will not do it, especially where there is uncertainty involved. And so that we need, as the conference that is being planned says, we need the role of the visible hand of government. Incidentally, Joe Stiglitz always likes to say that the reason why we don't see the invisible hand of the markets is that sometimes it's not there. But besides this major structural transformation, we have to have already been referred by Shamshad and Uli. We need to provide a financial sector that provides counter cyclical finance in difficult times, whether there are financial crises, other macro shocks or now particularly the worst crisis of all in about 80 years, which is COVID. And so therefore, I think we need to help the financial sector. And we do, we should do it on the basis of a sort of new paradigm, I would call it a mixed economy paradigm for development finance, going in some ways back to the period, the golden period after the Second World War, when public development banks take such a big role. And I think that given the so-called global financial crisis in 2008, 2009, and now even more with COVID, we have a sort of renaissance, quite a sharp renaissance of development banks. As Rami so clearly said, at all levels, multilateral, regional, national, and even subnational. And also in all categories of countries, developed emerging economies and low income countries. And as was pointed out, actually Europe and Asia, and to a certain extent Latin America are the largest areas. And I just want to stress what Rami mentioned that these are big actors, the total assets of public development banks in all these categories and regions amounts to almost $12 trillion. And the total annual lending is well over $2 trillion. So in a paper we did with Regis Marodon from AFD and our friend José Antonio Campo, we estimated that if the lending by all these institutions increased by 20% this year or next, it would amount to $400 billion. And if we consider that they can exercise leverage because they co-finance with the private sector and assuming rather conservatively that it is a leverage of only two, we would have an additional $800 billion to both help the recovery from COVID and to start to deepen the structural transformation. But I think we need more and I think we need more ambition because the task is so hard to learn. I think we need bigger public development banks. And for example, there's a lot of consensus, particularly in developing and emerging economies that regional and multilateral development banks need a particular large increase in their capital. As happened during the 2008-2009 crisis when there was a superb response from the G20 and they increased very dramatically the capital of these banks as well as issuing SDRs. Neither of these things have been done yet. And so I think it's very important that these development banks are increased in scale, but also that they're able to increase to the extent possible the leverage by better collaboration and smarter collaboration with the private sector. And listening to Shamsha, I also thought that there is a risk, of course, that some of the loans that development banks have made, however prudently they're done in COVID times may have more of a difficulty to be repaid. So that is again another reason, I think, to increase the capital and the reserves to have strong buffers because we are in these extraordinarily bad times. But also next to that, of course, and there's a lot of work going on in the research we're doing, in the dialogue with development banks, which will hopefully culminate in the summit and also in further work later, is how to improve the functioning of development banks, how to improve the governance, how to improve the instruments they use, and how to best channel the coordination both of the private sector and with the governments to act as an efficient bridge between public policy and private sector markets. And so the idea would be that, thus strengthened, they could help very strongly the recovery during and after COVID. And it's very interesting that development banks, like for example, KFW, but many others, have applied a number of innovative measures during COVID. For example, they've applied debt standstills. They've adapted to give much more short-term lending because a lot of companies need working capital, need money to pay their workers. They have focused very rapidly on funding of health and funding value chains that have been disrupted by the pandemic. And they have also emphasized very rapid lending procedures for, especially for SMEs. And for example, just to illustrate, KFW, which is the second largest commercial bank in Germany, and one of the largest development banks, has increased its lending according to IMF estimates by at least 25% of GDP. So in a massive way, by doubling the operations in the first half of 2020. And this is similar throughout the universal development banks. But there is the major challenge to combine, and this is difficult, as Rami pointed out thoughtfully, to combine funding the recovery with continuing with the second big task, which is to build back better. And to channel the funds to this low carbon inclusive development model. And I would just like to finish here by saying that one of the interesting things about development banks, which could in some ways perhaps be generalized also to the private sector, is that several of them have begun to use interesting tools like shadow carbon pricing. For example, the European investment bank has been a pioneer of that, whereby projects are evaluated not just on purely commercial terms, but they're also evaluated in terms of the impact on climate change. So a lot of creativity, a lot of resources are needed to help transform development banks and the financial sector to serve the economy better in these difficult times. Thank you very much for the opportunity. Many thanks, Stephanie. I found it very interesting how you also painted the longer kind of gave it a longer term perspective. And so it will be interesting to see whether whether we will see this renaissance of development banks. Which, as you said, played a very important role in many countries in post Second World War era and kind of over time became quite unfashionable. And I think and you echo in a way also what Remy said before about not only quantity and quality, not only quantity, but also quality. So you've been calling for a big increase in capital of especially multilateral development banks, regional development banks. But I think the point that you couple this with a call also for improving the quality of governance and kind of the approaches to lending and so on. I think that's very important because I think we should not get carried away with only praising public development banks and I mean many of them have done a lot of great stuff, but there are of course also valid criticisms and including the governance structures and which also then have impact on the outcomes. So, I would like to turn to Marianne, who as you know is executive director of the Green Digital Finance Alliance. So, Marianne has over her career worked a lot also on climate finance financial inclusion, but she's been at the forefront of kind of the question of how can we use digital finance which clearly is, you know, the absolute mega trend in financial markets now, how can this be employed in a better way to have sustainable outcomes so kind of linking the digital agenda with the green sustainability agenda. So I'm very, very pleased that we have Marianne with us now and Marianne the floor is yours. Thank you so much Uli and thank you everyone for your excellent comments. I will, as Uli said, build on more of a digital perspective. Digital finance of course brings a new opportunities to rethink and redesign capital markets but also retail financial instruments for green and for sustainability. Of course it also brings with it new risks and some of those risks we have been discussing in the context of the Libra coin, but also higher indebtedness for fast credit, etc. I want to focus though my five minutes on the question that Uli invited us to think about which is to think big and digital and digital finance invites us to think big in a different way. So it invites us to think big by aggregation of the many small both at the investor side aggregation of the investor, many small investors to make it up to trillions, but also aggregation at the asset level side. What we had seen in COVID and what we saw pre before COVID was a number of central bankers in developing countries looking to digital to think about how to not to lower their dependence on capital market finance. So we saw some years ago, the central governor of the central bank of Kenya, Patrick and Eurugia issue the Mekiba bond, which was a government security issued on a mobile platform. And his thinking was, well, let me as a central bank start to cultivate a greater culture of domestic savings. When I go to capital markets, the prices about 7%, which if you're the US, it's less than one. But if I can start to offer government securities efficiently at a low price to my citizens, then I can invite even those that are living in rural areas to also support the financing of government infrastructure. This is the first iteration of that we saw. Then we have seen last year, the issuance of a green retail Sukuk also on a mobile platform by Indonesia. And, and what is interesting about the investors into that Sukuk is that the largest percentage of it was actually millennial investors. During the COVID crisis, we saw the Philippine Treasury together with the Union Bank of the Philippines issue a citizen savings bond to respond to the COVID crisis. It was actually issued on a distributed lecture technology. So it was not even just on a simple mobile money, mobile platform, it was actually on the most advanced types of digital protocols that we know today. And what that enables the Filipino Treasury to do together with the Union Bank was actually to offer citizens even that are unbanked because you don't need a bank account when it's on a DLT and a mobile wallet on top of that. So it helped the government in finance the response to the COVID crisis without having to go to capital markets. So it increases the credit ratings and it changes entirely the accountability mechanism. So suddenly you're not accountable to a Chinese creditor, you are accountable for the financing of the response to your citizens. And that is the aggregation at the citizen level, then to the aggregation at the asset level. As we, and as we heard about just before from Stephanie, the importance of getting financing to SMEs, because of the fact that, well, most jobs are created by SMEs, especially in developing markets. What we are seeing now is, and what is really the potential is the aggregation of SMEs in a cost efficient way by leveraging mainly their transaction data. And what we have seen doing the COVID crisis is the launch of the African continent's first ever digital exchange, SME exchange, digital only by the mobile wallet eco cash. Because what they realized is that we have a lot of liquidity sitting on their platform from local savings and how to channel that into growth SMEs in the country that are perceived as too high risk from foreign capital. And then you look to China, we can look to what can the future of this look like on the my bank platform, which is the largest SME lender in the country and one of the largest in the world. What they're starting to do is that they're starting to use their data points, not only on the transactions, financial transactions of the SME, but they're broadening it out. So they're including green automated greenness rating into the automated credit scoring of the SMEs. So for instance, they're using natural language processing to automate to have machines read the utility bills of the SMEs and thereby automatically calculate an energy efficiency score for the SME and layer that into the loan so they can lower the cost of capital dependent on green behaviors. This is what we can also move to other markets and where we could have development finance institutions play an extremely important role. Because a lot of the development finance institutions are our investing or our shareholders in a number of the commercial banks on the African markets that that have the SME credit lines or they're investing into the micro finance institutions that have the SME credit lines. We can start to look at how to further digitize those credit lines and also look at what are the data points that these banks such as eco banks and others already have that have carbon or other types of green capabilities. So we can start to put in greenness rating into these SME credit scores. So we can also bring lower cost of capital to green SMEs on the African continent where currently the interest rates are around 16, 15%. So there is definitely room for for starting to use data to innovate new types of digital SME products for the African market. I will end up by thinking about what my call to action would be to the to the to the development finance institutions development finance institutions and I think my fellow panelists have also said hold an extremely important role. And if we look at it through a digital lens. Well, development finance institutions if we look at the European ones. It's only 7% of the capital from the DFI is in Europe that go into agriculture and forestry. So really the, the, the, some of the most important assets for the poorest people of the world. And, but what is specific about development finance institutions investments instruments is that the due diligence around it, and the risk assessment is actually done really well, because development finance institutions are ready to take the upfront cost of doing the due diligence. So I think the next step for the development finance institutions to also grow a mandate and a public support to get more capital from taxes is to look at digital to open up a few of the investment vehicles to retail investment or to savers in developing markets. It could take it could be a forestry finance vehicle it could be a vehicle into small scale farming that could be opened up to citizens in the developed market to actually be part of and get closer to the assets, because to today development finance institutions are a bit too far removed from the everyday lives of citizens. Most people don't understand what they're doing. And they don't really know what their pension money or their taxpayer money are doing in these in these institutions. So using digital to start to engage also citizen level would be one call to action. Another call to action would be for the development finance institutions to lead the way to show how we can leverage new digital technologies to do biodiversity in the post portfolios. Today we have the data capabilities. We have the Norwegian climate ministry that just financed open source satellite data from this year until 2023. So we can observe deforestation risks from the sky. We have bio acoustics that we can automatically capture below the canopy. What is the, what is the biodiversity before and after in an area of an infrastructure investment. We have the photo camera traps and we can layer all this in efficiently and effectively with digital technology, but we need a development finance institutions to show how it's done and really set the bar high. I will stop here and look forward to the conversation. Thank you very very much Marianne. This was really fascinating and so you very nicely highlighted both the opportunities. We have the knowledge providing mobilizing domestic resources, and thereby also reducing dependency on international capital, but also bringing finance closer to citizens needs and I think you're, you pointing to the huge potential that public development banks have in using these technologies to to kind of update their own softwares and and and really building on what is possible in leveraging development finance I think this is very well made. I'd like now to move to Sony Kapoor, who has been one of the leading voices in development finance for quite a while he he's now the director of a new think tank, the Nordic Institute for finance technology and sustainability or and Sony I'm very much looking forward to to hear your thoughts and I know you can sing big so please do. Thank you for having me. I'll try and focus on what COVID has changed rather than, you know, the nuts and bolts of of development finance. I think the first important thing to remember is so since, as Remy mentioned, the two aspects that are most important is the quantity of finance and the quality right. And we mentioned the big numbers lie in Western institutional investors of the order of trillions of dollars and there's been about 11 trillion dollars of quantitative easy. So one big problem faced by large institutional investors has always been income generation. How do they generate a return. And if you look at the past three or decades or so, two thirds of the in of the returns in Dutch Norwegian and other pension funds have come from capital gains and that's because of the secular decline in interest rates that's been the biggest driver. And we've already hit zero we were sort of hitting negative and even with additional QE we have really reached the end of the road. So in our estimate future income returns be it from dividends from shares or from, you know, interest rates from bonds is going to offer returns of no more than two or 3% and that is simply insufficient to meet our pension obligations. And at the end of the day, you can have finance dissociated from GDP growth, but eventually, you know, gravity reasserts itself. So there was a very strong link to future GDP growth potential and where financial income can come from. And in some sense, you know, COVID has accelerated was already clear that the vast majority of future economic growth GDP growth in the world, despite the setbacks that the emerging and the developing world is seeing now will come from the developing world. I mean, it's just a matter of demographics and catch up growth and how far they are from the technological frontier and you know, so that is in some sense, a clear secular trend from which there is no escape. So if any body is chasing returns, you know, profitability, which all of these institutional investors will have to, they will have to increasingly reallocate towards developing economies. The second interesting aspect of COVID is that it has actually shown the benefits of diversification. And as we know, economies across the world, particularly in Asia and in large tracts of Africa have had very different COVID related outcomes compared to, you know, let's say what's happening in Italy or the United States, etc. Right. So there's been a significant diversity, both on what has happened in health, where for example, Taiwan has had no cases for the past 200 days, versus what's happening in the United Kingdom, but also on the economic impact. And I think the value of diversification away from institutional investors which are largely concentrated in OECD economies is going to become even more valuable. The third interesting thing that COVID has done is it has really turbocharged something that was already becoming a very strong secular trend, which is the need for reputation. Call it either ESG or SDG related financing or the need to tackle climate change or sustainable or responsible financing. That really has been turbocharged with COVID, where those so-called non-financial aspects have become ever more important in the eyes of citizens, in the eyes of regulators, and in the eyes of many of the large investors themselves. And I think all three of those, the need to generate income, the need to diversify and the need to enhance reputation will potentially drive large institutional investors far more into the kinds of places where the SDG funding gaps are the biggest and the need for climate mitigation adaptation are the biggest, the funding gaps. The fourth aspect is, of course, it's important to remember that finance operates within regulatory constraints, right? I mean, so regulations effectively define the slope and the constraints and within that finance tries to maximize profitability. And I think that there is clear regulatory recognition and everything from, you know, what will hopefully soon be mandatory climate stress to the UNDP OECD SDG alignment agenda, what is voluntary now is likely to become compulsory and mandatory tomorrow. And the lie of the land is very, very clear that regulation will increasingly move towards driving finance in the direction that we want it to go. The fifth point that I think is very important is, even at the same time as, you know, COVID has stopped us flying into sub-Saharan Africa to do diligence, a number of the development finance institutions, development banks, etc have had to adapt, right? And a number of the examples were used here. We've basically all gone virtual. So in some sense, the distance between me sitting in Oslo and what's happening in a small medium enterprise in Kenya has shrunk. And COVID has really turbocharged this digitization, the shrinking of distances, which is which is one of the biggest constraints in financial intermediation. So I think the cost of financial intermediation across the Norwegian investment fund, the Norwegian oil fund investing in Kenya is going to shrink dramatically. As a result of what has happened with COVID and the new ways of working, the new cultural adaptation and the new technological innovations that have been introduced. And I think last but not the least, so these are all, I think the promising features for how COVID has potentially turbocharged the amount of money that is potentially available for SDG related and sustainability related financing. But at the same time, there is also a downside. So unless and until we change our methods, there is a real risk that the data points that are going to emerge from the crisis where, you know, because of what the Fed has done because of the fact that OECD countries have had to have had, you know, 20% of GDP of counter cyclical response. We've come up with data points where emerging market currencies will have looked even more volatile where a number where the degree of counter cyclicality and policy space is much lower than what has been in OECD countries etc. So if that is just normally treated as a normal data point, it can potentially show that the riskiness of emerging and developing economies is even higher than it was as in the past. And I think that is a real risk we need to address. But I think the advantages of what COVID will do long term to the field of development finance will far exceed the potential downsides. I'm done. Many thanks Sony for highlighting these trends. I found particularly interesting your point about the development into ESG sustainability related areas, you know, being turbocharged now, but I wonder if, I mean, I would like to add two caveats to that. I don't know if you agree. One is kind of the obvious question about greenwashing. So we have a lot of don't want to name names but you know the black rocks of the world, who are talking a lot about, you know, all the great things they're doing but we also I think it's almost on a daily basis reports from NGOs who show that, you know, this fund or this manager or this bank has has financed whatever rainforest destruction and so on. I mean, that's one thing is, you know, are the other words really aligned with the action. There's a lot of liquidity, you know, waiting for good opportunities everybody wants to go green sustainable and so on. But if we look at poorer countries who need this capital the most is this really going there. I think the key question because, you know, kind of, as we could see during the crisis, even though they experienced capital outflows in March, when when kind of the global financial system without the bring but capital returned relatively to, you know, kind of the safer largely emerging economies. But we do have, and that also is related to what some shot emphasized relating the debt problems. We do have now a growing number of low income, increasingly cut off from international capital markets and the question is will this reverse. Now I'm kind of going into the discussion already. And so, I must say I haven't been a very good timekeeper, but one reason for for for this being the case was that all your interventions have been so interesting so I saw like no let let it go. So, I would like to do a second round now. So, first of all, I like all panelists to join by a video again. And starting in the same going the same order starting with me. Invite you all to, you know, throw in your, your sorts, you know, reactions, comments to what the others have said. And I would also like to invite the audience to post questions in the Q&A function if your questions or comments and I'll pick them up. So let's do this. Second round. Remy, please. Well, no comment on what Stephanie said. Well, she said, better than I what and we're working so closely and then no comment on what we discussed, we are discussing often with Sony or on the macro on the macro scene and can only agree with what he said. I was very interested in Marianne comment and what being the shareholder as the CEO VFD of of pro parkour. One of one of one of the defi's you were mentioning there's a bit of a, this is the reason why with Stephanie we are pushing for public development banks as a clear name. We are passing concept to identify the 452 institutions I was mentioning. Sometimes the world, the acronym defi is is is unclear. We don't know if we're talking about the whole group, or only about the subgroup of public development banks that are devoted to financing the infrastructure in the global south. And I think what Marianne was talking about was the second exception of the term which is for me the right one. And yes, they are very specific. Yes. Probably the European defi's. I know them for a long time is is an example of cooperation between public banks that their mother entity or father entities should should pay a closer attention when liaising with each other, when they are waiting, diligence, well, and be way more way more rapid and effective like they are, which does not mean that they cannot do better. And I was extremely interested in what you said in opening up their instruments and explaining our own citizens what they're doing and that this is in their interest and that this is very concrete. Yes, and on this probably their shareholders are a bit advanced than them for time. Push the ambition on sustainability. And you will see by the summit in November to elements. The European defi's are preparing a statement that will be presented during the high level event on climate alignment, hosted sponsored by EIB. So a common position that will go really in the in the right direction and the second high level event is the one led by ETI this time on SMEs in Africa so all your proposal could feed in clearly this both discussions and I will convey them to Gregory Clément, the CEO of a pro-parco immediately. Thanks a lot. Well, I'm pleased that we already have some direct action points resulting from from this event. That's what we want to see. Thank you for the second round and thanks to all the panelists for great talking in conventions. I'll just talk about two points. One is, I think Marion had great ideas and I think we should take all that forward. And perhaps ask her to distribute a script if she has, because there were so many things in there, which have pertinent to the sustainable development and mediation also, and also the digital finance world. On the public sector banks, which was not a topic I anticipated but because I knew pretty little about this. I have to share with you my own experience as a former governor of the central bank. I come from Pakistan and we had public sector institutions and we still have a six development finance institution which are joint ventures. Pakistan's experience with public sector financial institution has been very dismal, largely because of the issues that Stephanie pointed out. Governance prerequisites that Stephanie pointed out. Governance is very critical in a public sector institution, but also on what is the strategic frame of a public sector financing. As governor, I tried to also explore the possibility of establishing an infrastructure finance public sector institution. We had one in the past which was doing a great job and then it ended up in failure because of the governance issues. And there was tremendous opposition simply because everybody thought either you go for public-private partnership or you go for private sector infrastructure. So I'd be very curious to learn more about how the lessons learned from developing countries have been integrated in the futuristic proposal. I fully agree that SDG is a public sector agenda and we definitely need more public institutions to push for it. But how do we go about it? Marianne had great ideas, but also I'd like to read up more about the proposal that's going to be at the summit. Thank you. Thank you, Shamsat. Stephanie, over to you. You still muted. Thank you very much. It was such an inspiring set of presentations. But actually one of the key points that struck me when you were speaking, you were contrasting the liquidity, excess liquidity we have in the system with the needs. And you refer particularly to poor countries, but it's also true for middle-income countries or even advanced countries that this big challenge of how you channel the available savings and liquidity to the needs. And I think one of the answers, you may not be surprised that I say this, is having appropriate channels, appropriate mechanisms. Because when the central banks just print a lot of money, a lot of it then ends up in the private banks and private banks put it back in the central bank. But what you want is for the money to go to the SMEs, to go to innovation, to go to green technologies. And you need mechanisms to challenge, to channel this. And I think that one of the actually secret strengths of the lack of development back is that they are a potentially good channel provided they have good governance and so on. You could think of others, like Sony's in Norway, so you have the Norwegian sovereign wealth fund, which channels a part of its savings to developing countries. Other sovereign wealth funds do the same. And one could also think in terms of the private sector, for example, you know, somewhat more directed lending could be partly channeled to green activities through regulatory encouragement, or through other ways, the development banks could encourage the private sector to go into particular sectors, innovation and so on. So I think that it's somehow a gap in the thinking of economists who think about the macro issue and then separately they get a very kind of disaggregated micro level. And we're not thinking about these intermediary institutions. And also we have to look back historically because I recently learned actually I should have known that Roosevelt one of the key mechanisms he used for the Green New Deal was a major development bank, which was then bigger than Wall Street. So you can, you know, you can learn from history and we can learn, as Shamsha said from each other. I thought her point about Pakistan was important. But it's also I think interesting to see that, for example, India basically privatized all its developing banks. But now they're thinking very seriously, the conservative government of recreating one for infrastructure because they see that private sector on its own cannot generate the long term funding that is needed. So I think we need to have a balance of having, yes, good institutions. And one encouraging thing in the research that we're doing is that there are countries that themselves in general don't have such good governance, but they have managed to in some way isolate the development banks and have these relatively well governed or other countries that have improved significantly the governance one one case. Classically quoted is the Uganda Development Bank, which major loss making, and now practically no losses, very good on complying with the wing standards, and so on. And I think there was technical assistance, there was good leadership. So this is always, I think, a dynamic picture, even the China Development Bank, the chapter on the China Development Bank in our book. The title says born bankrupt, because the China Development initially was have made major losses. Then they got a very dynamic CEO and they were told they couldn't make any more losses, and they don't. If anything, they're almost too commercially oriented, but at least they have recovered from this major major loss. So I think we have to think in a dynamic way. Thank you. I'm only saying Stephanie so I noticed where we're running out of time so we have only five minutes left so this this de facto is now the the closing round. We did a bit unfortunate but let me hand over to Marianne. And thank you for the for the very positive response and support. I think that is, that was the best outcome of this conversation we could I could have wished for and happy to share any of our work and thinking with of course all of you and and to take these reflections forward hopefully into more market demonstration also so we can we can or experimentation to scale some of these use cases out there. I wanted to pick up on the old sonica was a really interesting comment around sort of ESG and reputation, sort of basically your behavior being your new currency in a way. And as an asset if you want to attract the investors because that was actually, we had the first ever digital bond issuance on a on a DLT platform by the World Bank, it was the I back the I bond as sustainability link bond with CBA in and that was exactly the response of that digitization of a bond issuance process was that the investors felt much more close to the asset. It was much more frictionless and therefore the trust and the perceived risk went down. So, how can we think about and use some of deploy some of the digital tools and some of these lessons to also bring down some of the perceived risks that has resulted in what you talked about really of the capital flight out of these countries due to COVID-19. How can we use these digital technologies through data, because what we're seeing in a lot of these fintech solutions is on collateralized lending or data being the collateral. How can we use data to to de risk both at a perception level, but also at a real asset level. These investments so we don't see the same capital flight way out of these countries from green assets when we have future shocks. I'll stop it there and just look forward to the conversation going forward. Marianne, I think you really brought very important points to this discussion because I think the digital really has to be has to be given much more prominence also in the development financing world. Sony actually, can I invite you to to to say one sentence afterwards. Sure. I lost you for a second, but I think you're done. Well, on your first point of greenwashing, the fact that everybody feels obliged to greenwash is actually a huge progress, right. I mean, for the most part, up until now, you know, Exxon was happy being Exxon and you else was happy being a pure oil and gas firm and you know, BlackRock didn't care about even bothering to greenwash and everybody is knows and understands that the public mood has changed that the zeitgeist has changed that the reality of climate change and the physical impacts are being lived across the world by more and more people. And this is an issue they can no longer ignore. So this is a step in the right direction, you know, a lot of the greenwashing will fall away, things will become more rigorous, people will face reputational risk, but but we're headed in the right direction, the fact that everybody feels obliged to either greenwash or actually do something in reality. So at the point and also the point that I think Stephanie and a lot of the others brought about, which was there was a big difference between, you know, sort of liquidity being available central bank liquidity being available and it actually being deployed. And this is where you know I put the whole burden of responsibility on Rameen. So much depends on the outcomes of the finance and common summit. So effectively, if you think about this, you know, this is water at two levels up here in the tank is this huge pool of liquidity, which has been enhanced by the central banks, and down there are the where economic returns are actually available, which is where there's a change in the number of consumers is rising where you know, even basic technology like a simple mobile phone can triple someone's productivity. Right. I mean, the economic logic of where economic growth is going to come from is indisputable. The long term link between economic growth and financial returns is also indisputable. The question is that we are been terrible at connecting these to the pipework the intermediation infrastructure that connects the Norwegian oil fund to the SME in Kenya has been terrible and if Rameen is successfully able to herd cats and bring together, you know, the African development banks, many of whom are sub $1 billion with the giants such as the China Development Bank and the World Bank, etc. Many of the Sub-Saharan African Development Banks are totally undercapitalized. The World Bank and the African Development Bank and the other MDBs between them have $1.3 trillion of additional lending capacity without losing, you know, a triple A or a double A minus rating, right. So there is a sensible way of using this existing pipeline of infrastructure to get these development banks to work together coherently to be able to channel that money. And if we are able to do that with the reality that there is actually much more demand to be able to do this together with what Marian was talking about the enabling impact of technology which significantly reduces the potential and the and the cost of this intermediation. Then I think we are ready to actually finance the decade of action. So Rameen, it's all up to you. So there's a little bit of pressure on Rameen. So we clearly count on what came out very nicely is that it certainly is a very important role for public policy to bridge the gap between finance and the real economy. So we've seen a lot of activity in finance, but not everything has been really contributing to real progress down on the ground. And it would be naive to believe that public development banks will be the panacea and that they will be alone doing the trick, even though of course we count on you Rameen. But I think it's also clear we all in this discussion have agreed that there is an important role and but we also do need new ways of thinking so you know just doing the same trick all over again will not do. And I think in particular the points Marianne made about the potential of digital you know the potential to use kind of bottom up approaches because that is one of the beauties in my view of some of these new digital technologies. But for this to really take off and get scale. We do need players such as development banks. So, we are over time already. I would like to thank you very very much it has been a fascinating discussion I think I wish we had another half hour or another two hours, because there are still a lot of issues on the table, but time is up. Thank you very very much. This video will be uploaded and I hope many will have the opportunity to watch it later on. Thank you very much. And Rameen, we count on you have a great summit Stephanie and others will be helping you. With your help. Thank you. Discuss will be taken forward. Merci beaucoup. And stay safe. Bye.