Scaling LCY finance is ultimately a coordination problem. Many constraints are interconnected and cannot be addressed by individual institutions acting alone. Progress depends on stronger coordination across actors and clearer signals from shareholders and policymakers.
Participants emphasised the need to clarify which institutions are responsible for which parts of the LCY ecosystem, where shareholder decisions are required, where specialist platforms can scale existing solutions, and where country-level pilots can test implementation.
Discussions amongst participants highlighted that the G20 is well placed to provide this direction. The Heads of MDBs Viewpoint Note was framed as a contribution to the G20 Brazilian Presidency’s MDB reform discussions, and fourteen of its deliverables were later incorporated into the G20 Roadmap. The G20 can reinforce the shareholder signal, while the Heads of MDBs group remains responsible for delivering and evolving the LCY agenda as implementation exposes practical constraints and market needs.
Greater alignment across institutions is also required. A recurring theme was the need for a common framework linking MDB activities, risk-sharing platforms, TA and market-development initiatives. This is particularly relevant where multiple actors are pursuing similar objectives through different approaches, including onshore treasury platforms, offshore hedging providers and market infrastructure programmes. Some of that linking is already underway between existing institutions, so there is opportunity to test and scale these arrangements further.
Several proposals focused on sustaining coordination beyond individual initiatives, including strengthening existing LCY finance forums, monitoring implementation over time and developing a practical implementation map that clarifies responsibilities across MDB treasury reform, offshore hedging capacity, onshore market development, concessional risk absorption, diagnostics and regulatory engagement.
A further priority is to integrate LCY finance more systematically into related policy agendas. This includes debt sustainability, PCM, financial sector development and reform of the international financial architecture. Embedding LCY considerations within these discussions would help ensure that FX risk is treated as a core development finance issue rather than a specialist market topic.
Specific propositions that attracted support included:
- Re-emphasise and strengthen the Heads of MDB LCY Working Group. Shareholders should make clear that they view it as a critical convening mechanism for MDB treasury reform, LCY reporting and system coordination.
- Broaden the forum beyond MDBs alone. As a complement to a strengthened MDB-focused channel, participants saw the need to attach a wider LCY convening space that brings DFIs, regulators, the private sector, borrowers and specialist platforms into the same market-development conversation, without diluting the specific shareholder ask to MDBs or creating unnecessary fragmentation.
- Use the G20 to send a clearer shareholder signal. The G20 can reinforce LCY finance and FX risk mitigation as core to MDB reform, private capital mobilisation and financial architecture discussions.
- Create a practical implementation map with owners and timelines. The LCY ecosystem should be mapped across MDB treasury reforms, the IFC/IDA Private Sector Window Local Currency Facility, specialist platforms, local market-development tools, data and diagnostics, and risk-sharing mechanisms. The map would show how different approaches fit together, where each is best suited, what gaps remain, who is responsible for addressing them, and which actions can be advanced within the next six to twelve months.