China central bank unveils rules on green bond issues

BEIJING: China’s central bank on Tuesday published rules on issuing green bonds by policy banks, commercial banks and other financial institutions, a step toward addressing environmental problems.

Authorities would use preferential policies to encourage green bond issues, the central bank said, adding that it aimed for “rapid development” of the green bond market. Proceeds from such issues could only be invested in green projects, according to the rules that took effect on Dec. 15 but were published on the central bank’s website on Tuesday.

Green bond issuers would be allowed to invest in high-grade, liquid money market instruments, and some green bonds would be included in collateral for the central bank’s policy operations, the rules stated China would offer policy support, including relending and interest subsidies, to help banks boost green loans, the central bank said. The central bank also called for the development of a green stock market index and securitization of green credit products.

China is trying to develop a green financial system to help contain the cost of pollution. A task force under the central bank estimates that achieving environmental goals under the five-year plan covering 2016-2020 will require an annual investment of at least $320 billion.

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