The Caribbean Development Bank (CDB) has partnered with the Multilateral Development Bank (MDB) Challenge Fund to launch a pioneering 12-month feasibility study aimed at designing a Contingent Capital Facility for multilateral development banks.
This bold initiative marks a strategic step in enhancing CDB’s financial resilience, strengthening its capital adequacy, and expanding its capacity to support Caribbean nations during periods of economic uncertainty.
The study, which began this month, is part of CDB’s broader push for financial innovation and responsiveness to the shifting development needs of its Borrowing Member Countries. As volatility continues to affect small island developing states, the Bank says it’s essential to rethink and future-proof its capital structure.
“This partnership represents an important step in our transformation into a more agile and resilient institution,” said Daniel Best, President of the Caribbean Development Bank. “The study will allow us to proactively explore solutions that can increase our financial flexibility and ensure that we remain responsive to the diverse and dynamic challenges facing the Caribbean.”
Supported by the MDB Challenge Fund—a coalition backed by the Rockefeller Foundation, the Bill & Melinda Gates Foundation, and the Open Society Foundations—the study is being carried out in collaboration with Cantium, Ardhill Advisory, and Linklaters as design partners.
An interim report is expected by September 2025, just ahead of the IMF and World Bank Annual Meetings in October. The final report will be published in advance of the Spring Meetings in 2026.
The initiative also aligns with the G20’s Capital Adequacy Framework agenda and contributes to a broader global push to modernize multilateral development finance. By investigating the use of contingent capital instruments—financial tools that can be activated in times of crisis or stress—the study taps into a growing trend among MDBs to use innovation as a lever for deeper development impact.
CDB sees the feasibility study as a crucial part of its evolving strategy to safeguard its financial health while ensuring that Caribbean countries continue to have access to high-impact, responsive, and sustainable development financing.
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