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MAS unveils US$2b investment programme to support green finance

A view of the Monetary Authority of Singapore's headquarters in Singapore, June 28, 2017. (PHOTO: Reuters/Darren Whiteside)

SINGAPORE — The Monetary Authority of Singapore has set up a US$2 billion programme to invest in funds with a strong green focus in a bid to position the country as a leading centre for green finance.

The programme is the main part of the green finance action plan that aims to grow a strong and diverse ecosystem of green financing capabilities in Singapore, said Education Minister Ong Ye Kung.

“Our next ambition is to leverage green finance to make the world greener. Finance fuels the economy and business...We must make finance green to drive climate action, mitigate and adapt to climate change,” added Ong, who announced the programme at the opening of the 2019 Singapore FinTech Festival on Monday (11 November).

The MAS said in a statement that it will invest in funds which are committed to drive regional green efforts out of Singapore and contribute to its other related initiatives including developing green markets and managing environmental risks.

Singapore: Green Finance

As part of the programme, MAS will allocate US$100 million to the Bank for International Settlements’ Green Bond Investment Pool, said Ong, who is also an MAS board member.

The central bank introduced a green bond scheme two years ago. More than S$6 billion green bonds have been issued to date, Ong added.

The announcement comes as the region steps up investments in projects with a green focus. Southeast Asian nations will need US$200 billion of investments every year until 2030 in projects that benefit the environment and have low carbon footprints, according to MAS’ estimates.

Singapore needs to transform the region’s green lending from a niche to a mainstream financing activity, said Ong. He cited the example of Singapore-based Quadria Capital, which became the world’s first fund to tap on sustainability-linked loans for private equity.

At the industry level, MAS will issue environmental risk management guidelines across the banking, insurance and asset management sectors to encourage the right-pricing of loans and investments, the minister said. MAS will publish a related consultation paper in the first quarter of 2020.

The Singapore FinTech Festival this year, held in conjunction with the Singapore Week of Innovation and Technology (Switch), will conclude on Friday.

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