We are working with interested parties from the banking and broader finance sectors to propose changes to financial regulations that will reduce the infrastructure investment gap, achieve climate and transition objectives, and promote global financial stability. These solutions are to be advanced with the G20 and standard-setting bodies.
As an independent organisation, formed by the G20 and free of commercial objectives, the GI Hub is trusted to facilitate collaboration and dialogue between the private and public sectors on these issues.
The TIC-R initiative is advancing reforms that will recognise the risk sensitivities of infrastructure as a discrete asset class in the Basel III framework, the international regulatory framework for banks. These reforms are necessary because:
Investors group financial instruments that have similar characteristics (e.g. similar risk) and performance (e.g. similar returns on investment) into asset classes, and then build portfolios of asset classes that are diversified and optimised to meet their objectives or the objectives of their clients. A group of individual assets that can’t be placed into a defined asset class is more difficult for investors to assess, and thus is viewed as more risky, and is less likely to attract investment.
In 2018, the G20 Eminent Persons Group recognised that several factors were blocking the establishment of infrastructure as a distinct asset class: the heterogeneous nature of infrastructure assets, insufficient data on the investment performance of these assets, and lack of a strong pipeline of continuous projects. Under the Argentinian Presidency in 2018, the G20 endorsed a Roadmap to Infrastructure as an Asset Class.
In our role supporting the G20’s infrastructure agenda, the GI Hub is acting on the Eminent Persons Group recommendation of a case for infrastructure as an asset class, distinct from generic corporate exposures with its own differentiated risk profile, in order to increase private investment in infrastructure and help fill the infrastructure gap with sustainable, resilient, and inclusive infrastructure.
Overcoming regulatory barriers to using credit-risk mitigation instruments to close infrastructure deficits
Banks are critical for closing infrastructure deficits, but banking regulations are not supportive
Better banking regulations can enhance infrastructure’s role in the green transition of economies
We’re analysing the effects of regulatory capital charges on greenfield infrastructure financing
Infrastructure debt remained resilient during the pandemic
Greenfield infrastructure struggles to attract private investment
Should there be a differentiated regulatory capital treatment for infrastructure investments?
Infrastructure equities are resilient to inflation shocks amidst a sharp decline in equity markets
Infrastructure debt passed the stress test of the COVID-19 pandemic
The European Banking Authority (EBA) Infrastructure Supporting Factor, introduced in 2020 under Capital Requirements Regulation (CRR) Article 501a, is part of a set of measures designed to mitigate the impact of COVID-19 on European recovery.
The European Insurance and Occupational Pensions Authority (EIOPA) introduced a new asset class of qualifying infrastructure investments in 2015.
The International Association of Insurance Supervisors (IAIS) formed an Infrastructure Taskforce in 2020.