The New Development Bank’s (NDB) recent issuance of $1.25 billion in “green” bonds has the potential to impact the US dollar and the US financial system, but not necessarily in a negative way.
The NDB, created by the BRICS countries, has issued these bonds as part of its sustainable financing policy, with proceeds going towards “green” projects. These bonds mark the first time the NDB has issued “green” bonds in US dollars, and the issuance was made under the bank’s $50 billion medium-term Eurobond program. The fact that the NDB has successfully re-tapped into the USD bond market demonstrates investors’ solid confidence in the bank’s credit and sustainable mandate.
The NDB’s Vice President and CFO, Leslie Maasdorp, has noted that the bank has a robust pipeline of green and sustainable projects to finance in all member countries. Since its establishment, the bank has approved almost 100 projects totaling $32.8 billion, spanning transport, water supply, clean energy, digital and social infrastructure, and urban construction.
The impact of the NDB’s issuance of “green” bonds on the US dollar is likely to be minimal. The NDB is still a relatively new player in the global financial system, and its bond issuance is small compared to the trillions of dollars that flow through global capital markets daily. Furthermore, the NDB’s bonds are not likely to be a substitute for US Treasury securities, which remain a staple for investors seeking safe-haven assets.
However, the NDB’s focus on sustainable development may have long-term implications for the US financial system. As more investors and institutions shift towards sustainable investing, it could reduce demand for fossil fuels and other unsustainable industries, potentially leading to a shift in global economic power. The US financial system may need to adapt to this changing landscape to remain competitive.
In conclusion, while the NDB’s issuance of “green” bonds may not have an immediate impact on the US dollar or the US financial system, it is a sign of a broader shift towards sustainable investing that could have long-term implications. The US financial system may need to adapt to these changes to remain competitive in the global market.
