Africa: Shuffling Towards Transparency in Climate Finance - AllAfrica.com
The African Development Bank (AfDB) says it and five other multilateral banks have settled on a joint process to report on their funding for climate change adaptation.
This is significant, because researchers have complained for some time that it's almost impossible to know how much is being spent on helping vulnerable countries adjust to more extreme weather and rising seas because there is no common system for recording climate aid.
At a workshop at last week's U.N. climate talks in Bonn, the six banks agreed on a definition of adaptation and the principles of the joint methodology they will use to account for and allocate adaptation finance.
They now plan to test this methodology and make it public by this year's annual U.N. climate conference, which kicks off in late November in Qatar.
Besides the AfDB, the participating institutions are the World Bank, the Asian Development Bank , the European Investment Bank, the Inter-American Development Bank and the European Bank for Reconstruction and Development.
"Having a joint ... methodology for tracking aid spending that contributes to climate change adaptation means the multilateral development banks and development partners can engage in substantive analysis of climate finance," Mafalda Duarte, the AfDB's chief climate change specialist said in a statement.
"We will be better able to measure, report and verify climate financial flows and the results they support," she said.
The move will go at least some way towards appeasing climate finance experts.
They have stepped up calls for a unified reporting system since rich countries pledged in 2009 to mobilise a sum approaching $30 billion to help poorer nations tackle climate change between 2010 and 2012 (money known as 'fast start finance'), rising to $100 billion a year by 2020.
FAST-START FOG
Earlier this month, the World Resources Institute (WRI) and Overseas Development Institute (ODI) published working papers examining the fast-start contributions of Britain and the United States - £1.06 billion ($1.64 billion) and $5.1 billion respectively.
On the bright side, the researchers found an increase from climate spending in previous years - a more than four-fold rise in the case of Britain's annual funding for climate objectives.
But they say both Washington and London are counting in their fast-start donations projects and programmes they were already supporting before 2010, meaning not all the resources are "new and additional" as promised.
The United States, for example, is including its contribution to the Montreal Protocol Fund to help developing countries phase out ozone-depleting substances, which it has backed since the early 1990s. Both countries are counting their financing for the Climate Investment Funds, pledged before the fast-start period began.
To make matters worse, the approach isn't consistent. Japan tags leveraged private finance as fast-start money, whereas Britain and the U.S. count only public finance. The U.S. includes export credit but the UK doesn't.
As a result, the self-reported contributions of each country are not directly comparable, the WRI and ODI researchers say.
"This strengthens the case we and other commentators have made for clear and compatible definitions and systems to track climate finance in support of a meaningful assessment of delivery on climate finance pledges," they write in a blog on their findings.
It's also difficult to know how much money has actually been received by governments and other organisations in developing countries, they add.
As well as better information from rich country donors on this, they urge comprehensive and frequent reporting by the multilateral institutions that manage large volumes of climate funding, including the development banks. So far, their disbursement reporting practices have been "mixed", they note.
If the new reporting initiative just launched by the main international development banks puts in place the building blocks for a clearer and more transparent system, then it could go some way towards rebuilding developing countries' confidence in climate finance.
Some poorer, vulnerable states say they have received little or nothing so far; nearly all say it is not enough. Knowing how much is flowing from which donors to where will help clear the fog, and provide a sounder basis for working out effective ways of raising more money in the coming years.
Read more at AlertNet Climate, the Thomson Reuters Foundation's daily news website on the human impacts of climate change.
EU finance ministers haggle over bank rules - Yahoo Finance
BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.
The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.
On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.
"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."
Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.
The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.
The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.
"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.
Forex focus: let's not kid ourselves about the pound - Daily Telegraph
With the the Olympics following hot on the heels of the Queen's Diamond Jubilee, he thinks UK consumers will start spending again. "Ticket sales alone for the Olympics are going to add 0.2pc to the GDP in the third quarter of the year. Things are set to get a lot better in the UK."
Simon Smith of FxPro is cautiously optimistic, pointing to the low yield on UK gilts and saying: "There's little doubt that the pound has benefitted from events in the eurozone. I would expect the pound to continue to appreciate vs. the euro as this effect continues, pushing EUR/GBP to new lows for the year."
However, many consider it is just a race for the bottom between the two currencies with the single currency definitely winning.
"We should be clear that this is not due to any inherent strength in the pound – just the euro's abject weakness," believes David Kerns of Moneycorp.
The pound is also being talked down. Christine Lagarde, head of the International Monetary Fund, has suggested the UK base rate should be cut further below its current record low of 0.5pc while the Bank of England is yet again considering pumping more money into the economy.
Jeremy Cook of World First thinks the Bank could bring in more quantitative easing as early as this month but he doesn't believe it will have much of an impact.
"We would prefer to see the Bank take on some form of 'credit easing' – the purchase of corporate debt as opposed to that of the government. The fact is that the liquidity that the banks are receiving is not making it through to businesses and consumers."
The UK certainly can't afford to be complacent and imagine we can get away with sitting on the sidelines.
Charles Purdy of Smart Currency Exchange says: "There is a great possibility that the UK could run into trouble. The UK has been masterful in its management of international investment sentiment as it convinces the international market to finance our debt at a fraction of the cost of that of Spain or Italy. If this changes then we are in the same position as the southern states of the eurozone."
And Smith adds: "The eurozone crisis is ultimately a banking crisis. We remain a nation still very much reliant on banking and financial services. Therefore, it can't be dismissed."
The situation in the eurozone is creating a vortex threatening to suck everyone into it. It is hoped that the drawn out debacle in Athens has bought sufficient time to work out how to limit the damage.
"Hopefully the time spent will have allowed the authorities to build up an adequate firewall to protect the other 16 members of the euro," says Alistair Cook of Currencies Direct. "If not, then we're in real trouble."
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