## A Market for Brown Assets To Make Finance Green

_IMF Working Papers, January 20, 2023_

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**Canonical URL:** [A Market for Brown Assets To Make Finance Green](https://www.imf.org/en/publications/wp/issues/2023/01/20/a-market-for-brown-assets-to-make-finance-green-528413)

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## Bibliographic details
- Authors: Domenico Fanizza, Laura Cerami
- Published: January 20, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400231414.001

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### Core proposition and mechanism
- Proposes a market solution to enhance the role of the financial sector in the green transition.
- Develop a secondary market for “brown exposures” to enable banks to dispose more quickly of stranded assets and thereby increase their capacity to finance green investments.
- Introduce newly created instruments—brown assets backed securities (B-ABS)—to expand diversification opportunities for specialized green investors and attract additional resources for new green investments.
- Draws on the experience of the secondary market for non-performing loans to argue that targeted policy and regulatory measures can simultaneously support the development of the secondary market for brown assets and green finance.

### Key findings and insights
- A secondary market for brown exposures can:
  - Allow banks to dispose more quickly of stranded assets.
  - Increase banks’ capacity to finance green investments.
- Brown assets backed securities (B-ABS) can:
  - Expand diversification opportunities for specialized green investors.
  - Attract additional resources for new green investments.
- The experience of the secondary market for non-performing loans suggests that:
  - Targeted policy and regulatory measures can support both the development of the secondary market for brown assets and the expansion of green finance.

### Thematic coverage and keywords
- Subjects: Climate change, Climate finance, Climate policy, Environment, Financial institutions, Financial markets, Nonperforming loans, Securities markets
- Keywords: climate change, Climate finance, Climate policy, Europe, experience of the secondary market, financial innovation, financial sector, Global, Green finance, green transition, greenium, market solution, Nonperforming loans, policy simulation, Securities markets

### Policy implications and recommendations (as presented)
- Design targeted policy and regulatory measures to support the development of a secondary market for brown assets.
- Facilitate creation and marketability of brown assets backed securities (B-ABS) to channel specialized green investors’ funds into new green investments.
- Leverage lessons from the secondary market for non-performing loans when crafting regulations and market structures for brown assets.

*IMF Working Paper No. 2023/011 — Domenico Fanizza and Laura Cerami (January 20, 2023).*

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2023/01/20/a-market-for-brown-assets-to-make-finance-green-528413_