The Debt-for-Nature Swap

Natural debt In recent decades, the loss of biodiversity in developing countries has attracted the attention of many environmental groups in the north. Efforts to protect global biodiversity through environmental protection are concentrated in the southern part of the world because most of the flora and fauna on Earth are within the borders of developing countries. Because of this regional focus, financial institutions are seen as an effective way for advanced industrial northern groups to promote their environmental interests in developing countries.

Debt of the financial sector - According to the concept of stock exchange, debtor countries can release the funds for carrying out environmental protection activities. Generally, natural debt (bilateral / commercial) uses "the purchase of foreign debt at discounted prices, the conversion of debt to local currency, and the use of revenue to fund local conservation activities" Including 89. From the point of view of the debtor, the advantage of swap is to reduce repayment of poor foreigners 86 These products are said to have the advantage that the underlying assets (precipitation and temperature, etc.) will not be the price of "weather derivatives" Different from traditional derivatives in point. "Direct value" According to the Weather Risk Management Association (WRMA), the number of weather derivatives in 2005 has increased by 80% over the past three years. That year, the world market reached 8.4 billion dollars.

Money repays the debt and strengthens the protection efforts of the state. From the point of view of the creditors, it is advantageous to suppress the uncertainty associated with future repayment (even if the debt price is lowered). The initial exchange of natural debt occurred in 1987 when Citibank sold Bolivia's $ 650,000 Bolivian bonds 90 at a discounted price. The debtor then secures the value of the original debt to protect millions of acres of tropical forests. Several financial institutions are beginning to introduce energy efficiency practices or environmental / intellectual growth requirements into their real estate portfolio. For example, real estate Mizuho conducted an environmental risk assessment and managed the environmental risk of all real estate and trust real estate activities, ING reduced CO by 75%.

Revise regulations on capital adequacy swaps. If these obligations can promote debt repayment swaps, debt repayment swaps or development obligation swap obligations, including the condition that qualified Eastern European countries will sell US obligations, for currency development or environmental recovery To be sold by the new holder. Assets required for activities. For the purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, it is stipulated that securities issued or guaranteed by the European Bank for Reconstruction and Development are regarded as exempted securities. The European Bank for Reconstruction and Development needs to submit a report to the US Securities and Exchange Commission (SEC). Allow the Securities and Exchange Commission to suspend such exemption