MDB Risk Appetite
The 2022 Capital Adequacy Framework recommendations called on MDBs to increase their risk appetite and prioritize providing finance over shielding credit ratings.
2030 Goals
MDBs work with lower-rated financial institutions and increase their risk appetite in general, reflecting the need for public opinion to absorb more risk to mobilize private capital.
StatusModerate progress
Moderate progress
The CAF recommendations called for the MDBs to prioritize providing needed finance over protecting their credit rating, including working with banks with lower credit ratings and taking on more first-loss financing. While the new WB presidency has supported the idea in theory, movement forward has been slow. ADB, EBRD and IDBG have implemented adjustments on their prudential level and risk appetite regarding the adequacy policy.
Relevant Actors & Audiences
Multilateral Development Banks
African Development Bank (AfDB), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Council of Europe Development Bank, European Investment Bank (EIB), European Bank for Reconstruction and Development, Inter-American Development Bank (IDB), Islamic Development Bank, New Development Bank (NDB - BRICS Bank), World Bank
Leading Countries and Alliances
G20 Ministries of Finance, G7, BRICS
Supportive Stakeholders
Center for Global Development , E3G, MDB Reform Accelerator
Milestones
The below events contain milestones related to MDB Risk Appetite.
April
WBG/IMF Spring Meetings 2025
Milestones
MDB Risk Appetite
MDBs conduct an internal review of their current credit rating frameworks, including the approach to first-loss financing, and assess how these frameworks can be adjusted to prioritize financing needs over maintaining high credit ratings.
June
4th International Conference on Financing for Development
Milestones
MDB Risk Appetite
MDBs, including the World Bank, ADB, EBRD, and IDBG, launch pilot programs that incorporate first-loss financing and collaboration with lower-rated banks.
October
WBG/IMF Annual Meetings 2025
Milestones
MDB Risk Appetite
The first evaluations of pilot programs for first-loss financing and collaboration with lower-rated banks are released, showcasing successful projects and areas for improvement
Resources
The below resources all pertain to the topic of MDB Risk Appetite.
How callable capital can be used to grow MDB lending capacity
MDB Reform, MDB Risk Appetite
The callable capital of the World Bank and other multilateral development banks is the ultimate unknown quantity — but it shouldn’t be. An article by Devex.
G20 ROADMAP TOWARDS BETTER, BIGGER AND MORE EFFECTIVE MDBS
MDB Reform, MDB Risk Appetite
Kazan Declaration: STRENGTHENING MULTILATERALISM FOR JUST GLOBAL DEVELOPMENT AND SECURITY
MDB Reform, MDB Risk Appetite
G20 Rio de Janeiro Leaders’ Declaration
MDB Reform, MDB Risk Appetite
G20 Legacy Book The Finance Track in 2024
MDB Reform, MDB Risk Appetite
Multilateral Development Bank Reform Tracker
MDB Reform, MDB Risk Appetite
Joint Multilateral Development Banks (MDBs) Statement for COP 29 – MDBs’ Support to Implementing the Paris Agreement
MDB Reform, MDB Risk Appetite