The EBRD’s Local Currency and Capital Markets Development (LC2) Initiative, launched in 2010, aims to strengthen local capital markets and to encourage the use of local currencies in the countries where it works.
Local capital markets development has always been high on the transition agenda for the countries where the EBRD invests. Local capital markets provide a reliable source of funding, thereby contributing to financial resilience and sustainable growth.
Together with local authorities, regulators and market participants, we have been working hard to reduce reliance on foreign currency lending and borrowing.
The EBRD invests in debt capital-market instruments as well as equity. These transactions promote higher standards of corporate governance while also fostering capital market development and promoting alternative sources of financing.
In 2016 EBRD signed the equivalent of almost €1.6 billion in 93 local currency loan and bond transactions, 29 per cent of the total number of debt transactions by the EBRD in that period.
The EBRD also issues its own local-currency-denominated bonds, or bonds linked to local currency, on the international and domestic markets for its funding purposes.
During 2016 it issued the equivalent of €509 million denominated in or linked to eight local currencies.
The EBRD first lent and issued bonds in a local currency (Hungarian forints) in 1994. Since then EBRD’s bank wide operations have been increasingly in local currency.
LC2 highlights to date include, among others, covered bond reforms in Poland, Turkey, and Slovakia, SEE link, CPI-linked Eurobond in Kazakh tenge and Inflation Targeting technical cooperation projects for central banks.
How we help the countries where we work
The Local Currency and Capital Markets Development (LC2) Initiative is made up of five different teams:
The LC2 Team provides critical linkages between policy dialogue and investments by offering technical cooperation projects that promote sustainable local currency markets, a more efficient capital markets infrastructure, a stronger domestic institutional investor base and an overall more liquid domestic market.
Banking provides local currency loans and invests in capital market transactions.
Treasury develops and advises on local currency loan features, funds and manages exposures arising from local currency assets.
The Office of General Counsel supports local authorities with legal and regulatory reforms related to capital markets development.
Economists, Policy and Governance Analysts evaluate progress made on local currency intermediation and capital markets development.