2 weeks Ago
THE board of directors of the Barbados-based Caribbean Development Bank (CDB)) has approved a Callable Capital Report, aligning with peer AAA-rated Multilateral Development Banks (MDBs). Callable capital is a financial safety net, provided by shareholders should the bank require additional funds to boost investor confidence, increase lending capacity or strengthen financial stability in cases of emergency. CDB’s evaluation follows other MDBs’ efforts to implement the recommendations of the G20-sponsored Independent Review of Capital Adequacy Frameworks.
The region’s premier financial institution said that other MDBs undertook the same exercise, such as the European Bank for Reconstruction and Development (EBRD), the African Development Bank (AfDB), the Asian Development Bank (ADB), the Inter-American Development Bank (IDB) and the International Bank for Reconstruction and Development (World Bank). CDB’s report covered three main areas, namely a review of the agreement establishing CDB pertaining to callable capital, which focused on the legal considerations and mechanisms around making a demand on the callable capital shares. The bank also did an illustrative “reverse stress test” which considered the extreme hypothetical scenarios that would give rise to the financial circumstances that could trigger a call on callable capital and a summary of shareholder’s reviews by many member countries outlining their legal, accounting and budgetary processes for responding to a request on callable capital.
It said that significant conclusions have been reached following the review, performed by the bank’s legal department. “Key shareholders consider callable capital subscriptions to be legally binding commitments. —CMC.
