Published on July 2nd, 2025
Please read more in our press release.
Seville, 2 July 2025 – Finance in Common (FiCS) and The Currency Exchange Fund (TCX) are pleased to announce their cooperation to reduce the currency risk in the balance sheets of Public Development Banks (PDBs) in low and low-middle income countries (LICs), while strengthening their capacity to deliver long-term financing denominated in local currencies. The proposal was accepted as part of the Sevilla Platform for Action and officially endorsed by the governments of the UK and the Netherlands.
The cooperation builds on the joint FiCS and TCX survey that reveals PDBs and their borrowers face significant exposure to currency risk. This undermines their financial resilience, increases the cost of financing, and limits their ability to secure new funding for investment. The challenge of currency risk exposure to financial stability is not only relevant to PDBs, but also their key creditors such as Debt Management Offices who in turn directly face global lenders.
As part of the cooperation, FiCS and TCX will embark upon an outreach program designed to increase understanding of currency risk targeting FiCS member treasuries and risk managers. These efforts will commence immediately and lay the groundwork for TCX’s hedging operations that transfer currency risk exposure PDBs into international markets. A blending facility created with financial support from the European Fund for Sustainable Development will improve the affordability of these operations in low-income countries and up to USD 500mn will be made available for concessional hedging with PDBs.
The facility has the full potential to support up to USD 2bn denominated in local currency in foreign direct investment for frontier and emerging markets. Especially in low income countries, a healthy and resilient public sector balance sheet is of critical importance to attract private sector infrastructure investment to promote sustainable development and strengthen connections in digital, energy, and transport sectors.
Phil Stevens, Director of International Finance at the Foreign, Commonwealth and Development Office: “The risk posed to both borrowers and investors from currency volatility continues to be among the most significant barriers to sustainable economic development in emerging and developing economies.
Through the UK government’s investment in TCX and BII’s membership of Finance in Common, the UK continues to support their crucial work to increase access to affordable ways of managing currency risk. We also welcome the focus on supporting the development of critical currency risk expertise among public development banks, which play an increasingly vital role in local market development.”
Steven Collet, Deputy Director General for Development Cooperation, Ministry of Foreign Affairs, Kingdom of the Netherlands: “Public development banks play a crucial role in driving the growth of local enterprises. Currency challenges, however, can hinder efforts to attract greater financing. That’s why it is excellent news that both capacity building and concessional currency hedging are now being enabled. That way, currency hedging will become more broadly available, benefiting business and entrepreneurs, and the local economy. We are grateful to TCX and the European Commission for this outstanding collaboration.”
Ruurd Brouwer, CEO of TCX: “This an incredible example of a practical, impactful partnership with tangible results. It puts TCX in the position to support the important mission of Public Development Banks in low-income countries by reducing their currency risk exposure and strengthening their risk management capacities. We are equally grateful for the continued support from the European Commission. TCX is looking forward to a close cooperation with FiCS and start working with local and international partners in the FiCS network on this challenge.”
Remy Rioux, Chairman of FiCS and CEO of AFD: “Currency risk remains a major barrier preventing public development banks from accessing international finance and delivering long-term, local impact. In many low- and middle-income countries, limited means to manage this risk drive up costs, weaken balance sheets and hold back investment. FiCS is proud to partner with TCX and the European Union to tackle this challenge—starting with more affordable hedging solutions, and building stronger capacity across the system to deliver sustainable financing where it’s needed most.”