PBC Launches Carbon Emission Reduction Facility for Financial Firms
In pursuit of the carbon peaking and carbon neutrality goals, the People’s Bank of China (PBC) launched the Carbon Emission Reduction Facility (CERF) for financial institutions. This structural monetary policy instrument is aimed to mobilize more social capital to promote carbon reduction and support the development of clean energy, energy conservation, environmental protection, carbon-reduction technology, and certain other factors. Under this facility, PBC will provide low-cost funds to financial institutions and guide the financial institutions to extend carbon-reduction loans at rates close to the loan prime rate of the same maturity. PBC also published a set of questions and answers (Q&A) on the carbon emission reduction facility.
For the time being, the facility is available to financial institutions that are licensed to operate nationwide. For qualified carbon emission reduction loans, PBC provides commercial lenders with funds worth 60% of the principal at the rate of 1.75%. For the facility to be well-targeted and directly supportive of low-carbon transition, PBC will require financial institutions to disclose information about such carbon emission reduction lending and the amount of emission reduction supported by such lending. The information disclosed will be verified by third-party professional institutions and subject to public scrutiny. The facility is designed to enhance financial institutions’ awareness of the importance of green transition, encourage more social capital to support the green and low-carbon industries, and advocate the philosophy of green living, green production, and circular economy, which will help achieve the carbon peaking and carbon neutrality goals.
Keywords: Asia Pacific, China, Banking, Carbon Neutrality, ESG, Climate Change Risk, Q&A, Sustainable Finance, low-Carbon Economy, Carbon Emission Reduction Facility, PBC
Previous Article
OSFI Consults on Technology and Cyber Risk Management GuidelineRelated Articles
APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
FSB Sets Out Good Practices for Crisis Management Groups
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
APRA Penalizes Heritage Bank for Incorrect Reporting of Capital
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
OSFI Releases Annual Report 2021-2022
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
OSFI Updates Timeline for Implementation of Certain Basel Rules
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
APRA Finalizes Capital Adequacy Standards for Banks
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.
