The Bank for International Settlements (BIS) announced the launch of a new green fund to finance environmentally beneficial projects in Asia and the Pacific, as reported by Reuters on February 15. The fund will invest in green bonds issued by Asian governments, financial institutions, and businesses that are denominated in US dollars. As an international financial institution owned by central banks, the BIS will manage a total of USD3.5bn in green bonds with the launch of this new green fund. The bank will consider investing in transition bonds and green bonds denominated in local currencies after its first and second annual reviews.

As more and more countries in the Asia-Pacific pledge to achieve carbon neutrality, the region has seen a strong demand from central banks to promote green economies through financial instruments. In Asia, the issuance of green bonds for environmental protection has increased significantly. Green bond demand was 5.7 times higher than the amount on offer in 2020, according to HSBC [HSBC:US]. In China alone, green bond issuance tripled in the first half of 2021 compared to the same period in 2020, reaching USD26.1bn and accounting for 13.4% of worldwide green bond issuance.

Sources:

https://www.reuters.com/markets/commodities/bank-international-settlements-rolls-out-asian-green-bond-fund-2022-02-25/

https://cn.nikkei.com/politicsaeconomy/efinance/45229-2021-06-30-10-46-02.html