The review is part of the IDB's efforts to implement the recommendations contained in the G20-sponsored Independent Review of Capital Adequacy Frameworks. It included legal aspects, financial and risk factors, and the process through which shareholders could respond to requests for callable capital.

"We are proud of what we have accomplished with our shareholders and other multilateral development banks (BMD), to clarify the process around such an important element of the MDB capital structure", said Gustavo De Rosa, Chief Financial Officer and General Manager of the Finance Department.

The review covered three lines of work:

• A legal pillar that examined the Articles of Agreement of the Inter-American Development Bank, the Bank's by-laws, existing Board resolutions, and other Bank policies to clarify the callable capital process;
• A financial and risk pillar that included a reverse stress test exercise to assess the likelihood of a call for callable capital;
• And a shareholder process pillar that involved a review by a group of member countries of their processes for responding to a call for callable capital.

The Inter-American Development Bank's Callable Capital report, conducted by IDB management, found that all participating shareholders consider callable capital obligations to be legally valid and binding, with some shareholders having mechanisms in place to conduct a call for callable capital on short notice and others having expedited processes that could be triggered.

The review also noted that, under the Bank's current rules, the Board of Executive Directors has the authority to call for callable capital.

The report also indicated that a call for callable capital remains a highly remote scenario, as confirmed by the reverse stress test exercise, in line with the Bank's sound financial policy framework built to preserve its credit rating.

Similar reports will be published by the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and the International Bank for Reconstruction and Development.

Translated by: A.M