Blended Finance: Implications for Supervisors

This Note highlights the reasons why EMDC financial services supervisors should increase their understanding of blended finance transactions, including: • the need for EMDC supervisors to raise their awareness of blended finance structures and risks, as their supervised firms may become increasingly involved in blended finance structures; • EMDC supervisors with a developmental mandate, such as those in many emerging markets, have an even stronger reason to engage; • the important role that supervisors can play in clarifying regulatory issues that affect the use of blended finance structures in their markets; • the importance of international organizations aiming to develop blended finance working with national financial authorities on blended finance to maximize alignment; • the need for practical capacity building to help EMDC supervisors engage with blended finance tools and balance their objectives of financial sector stability and achieving the SDGs; and • the complementary role blended finance could play in the COVID-19 recovery efforts for EMDCs, for example in scaling up health security measures.