Archive for August 10th, 2022

Retrospectives: On the Evolution of the Rules versus Discretion Debate in Monetary Policy

August 10, 2022

Harris Dellas and George S. Tavlas in this paper in the recent Journal of Economic Perspectives trace history of rules vs discretion debate in monetary policy:

Green and Blue Bonds as a mode of Sustainable Finance

August 10, 2022

SEBI released a consultation paper on Green and Blue Bonds as a mode of Sustainable Finance. Green bonds help raise funds for greening the economy whereas blue bonds are for resurrecting sealife:

One of the main hurdles for further growth has been a consistent and robust approach to identifying what is considered ‘green’. A lack of clarity in this regard leads greenwashing which is defined as the practice of channelling proceeds from green bonds to wards projects or activities having negligible or negative environmental benefits.
Bankers and lenders are cautious about financing new asset classes in the green bond market in the absence of adherence to widely accepted standards and taxonomies. On the other hand, no issuer would want to risk their reputation by issuing a bond which is criticized for not being adequately green or transformational, particularly due to lack of availability of a domestic green assessment framework to rate them in a transparent and uniform manner.
SEBI guidelines on green bonds provide a list of categories wherein funds raised through debt securities are eligible to be classified as ‘green’ debt securities.
While China and the European Union (EU) have issued their own taxonomies regarding assets eligible to be financed through ‘green’ bonds, India does not have a detailed taxonomy of such assets. Further, in the absence of the same, major issuers such as SBI, Yes Bank, IREDA etc. have their own internal green bond frameworks to identify and finance projects.
In this regard, it is proposed that the list of sectors identified as “eligible” under the SEBI framework may be updated in line with the updated ICMA guidelines and market feedback/public consultations
SEBI seeks answers on whether giving color codes to bonds will help in raising funds for sustainable projects?

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