An Innovative IFI Operating Model for the 21st Century

The document argues that MDBs must shift from a project-by-project approach to a systemic, program-based model to address the climate crisis in emerging markets and developing economies (EMDEs). It recommends scaling country sector platforms, deploying risk-sharing instruments like guarantees and local currency financing, and overhauling MDB business models through standardization and an 'originate-to-distribute' balance sheet strategy. The authors emphasize the need for better integration of domestic financial institutions and increased transparency in data sharing to mobilize private capital at scale.

• MDBs should transition from ad-hoc, project-by-project funding to coordinated country sector platforms, such as Just Energy Transition Partnerships (JETPs) and V20 Climate Prosperity Plans, to achieve systemic shifts and long-term impacts.
• Domestic financing can provide approximately 50% of the required climate financing in EMDEs, but mobilizing this capital requires MDBs to engage domestic financial players—including central banks and national development banks—early in the process.
• To reduce the cost of capital and catalyze private investment, MDBs must scale risk-sharing instruments, specifically guarantees, which leveraged 26% of all mobilized private finance between 2018 and 2020.
• Currency exchange risk is a major barrier to investment, with 60% of foreign currency debt issued by firms being USD denominated; MDBs should support local currency loans and scale tools like the Currency Exchange Fund (TCX).
• MDBs should adopt an 'originate-to-distribute' business model, where they originate loans and then sell them to the private sector via securitization, rather than the current 'originate-to-hold' model that ties up capital.
• Standardization of Key Performance Indicators (KPIs) and investment labels (such as those from FAST-Infra) is necessary to create recognized asset classes and reduce transaction costs for blended finance.
• The current funding capacity of the World Bank is insufficient for the 'polycrises' environment, as its roadmap indicates it only has funding for roughly one mid-sized crisis per decade.

APA

Pinko, N., Tonkonogy, B., Widge, V., & Buchner, B. (2023). An Innovative IFI Operating Model for the 21st Century. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/cpi_an-innovative-ifi-operating-model-for-the-21st-century_updated.pdf

Chicago

Pinko, Nicole, Bella Tonkonogy, Vikram Widge, and Barbara Buchner. An Innovative IFI Operating Model for the 21st Century. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/cpi_an-innovative-ifi-operating-model-for-the-21st-century_updated.pdf.

Wikipedia

{{cite report |last1=Pinko |first1=Nicole |last2=Tonkonogy |first2=Bella |last3=Widge |first3=Vikram |last4=Buchner |first4=Barbara |title=An Innovative IFI Operating Model for the 21st Century |publisher=Climate Policy Initiative |date=June 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/cpi_an-innovative-ifi-operating-model-for-the-21st-century_updated.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pinko2023innovative, author = {Pinko, Nicole and Tonkonogy, Bella and Widge, Vikram and Buchner, Barbara}, title = {{An Innovative IFI Operating Model for the 21st Century}}, institution = {Climate Policy Initiative}, year = {2023}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/cpi_an-innovative-ifi-operating-model-for-the-21st-century_updated.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }