Strategic Session of BRICS Inter-Bank Cooperation Mechanism Held in Moscow

On April 23–24, Moscow hosted a Strategic Session of the BRICS Inter-Bank Cooperation Mechanism (ICM). The meeting dealt primarily with the priorities of VEB.RF chairship of the ICM, including the development of trade finance in national currencies, the development of a mixed financing system, and the formation of national and global voluntary markets for carbon units with the participation of BRICS countries.

Participants of the the session noted that blended financing could become one of the main approaches to ensuring the long-term financing of projects and programmes aimed at achieving the sustainable development goals. The advantages of this form of financing is that it combines various financial sources – private and public, national and external, equity and debt – within the framework of a single support and management mechanism. “This is where the participation of institutions such as VEB.RF is crucial in terms of creating the legal, fiscal, and other conditions necessary to serve the interests of all project participants. In a sense, blended financing is similar to existing PPP mechanisms, VEB.RF Deputy Chairman Yuri Korsun explained.

Y.Korsun specifically pointed to the practices that VEB.RF uses in its flagship programme – the Project Finance Factory. In his report, the VEB.RF Deputy Chairman shared his experience of using the Factory’s tools when financing projects to develop cities as centres of sustainable development.

The Session also featured a discussion on the prospects for expanding cooperation with regional development banks. “Most investment projects that use blended financing have small budgets. We’re talking about 5-10 million dollars. This is why it makes sense for small regional development banks to learn from the experience of the Factory and VEB.RF and start working on a blended financing basis,” explained Sergey Storchak, a senior banker at VEB.RF.

During the session on trade finance in national currencies, the participants discussed the importance of having a wide range of trade finance products that are accessible to all categories of clients involved in import-export transactions. Representatives from the Russian Export Center shared their experience of using the most popular trade finance instruments and national currencies in these operations.

At the ‘Voluntary Regulation of Carbon Markets’ session, the Executive Secretary of the Committee of the Climate Policy and Carbon Regulation of the Russian Union of Industrialists and Entrepreneurs, Ivan Zhidkikh, proposed launching the process of creating a BRICS carbon market. Establishing a carbon platform will allow the BRICS countries to play a leading role in the global climate agenda. The initiative was supported by First Deputy Chairman of the Management Board of VEB.RF Alexey Miroshnichenko, who believes that the first steps in this direction could be the creation of a unified infrastructure and the development of a unified methodology for climate projects and common approaches to the verification of carbon units.

“When it comes to setting up a carbon market in the BRICS countries, a unified register of carbon units (the results of climate projects) is key. The development banks of these countries can play a decisive role in this process. The first practical step towards creating a register would be to sign a memorandum of intent during Russia’s chairship of BRICS in 2024,” Ivan Zhidkikh noted.

During the session on cooperation with the New Development Bank (NDB), the participants discussed projects implemented with the support of, or in collaboration with, the NDB in BRICS member countries, the NDB expanding the practice of financing projects in national currencies, and the prospects for cooperation between the NDB and the BRICS ICM. The participants also agreed that the development of projects in the NDB pipeline involving participants from several BRICS countries, including its newest members, will help strengthen integration processes and internal economic ties within the BRICS framework.

The Roscongress Foundation is the organizer and operator of all events held during the Russian Federation’s chairship of BRICS.