This document provides a summary of the results obtained from the examination of local currency financing as mandated by decision B.33/14. In addition, it aims to provide the fundamental justification for GCF’s contemplation of integrating local currency financing. The review evaluates various strategies for the implementation of local currency financing and investigates measures to mitigate risks associated with foreign currency. Furthermore, it delves into crucial factors required for the successful implementation of pilot programs focused on local currency financing.

The analysis highlights the possibility for the GCF to explore different options for providing funding in local currencies to Accredited Entities, thereby helping them manage foreign exchange risk. This document proposes key changes to support the implementation of a local currency financing program. These changes involve endorsing the Secretariat's development of potential structures for local currency financing, incorporating various approaches identified in the review. Furthermore, the document suggests exploring measures to mitigate broader financial risks, including foreign exchange risk, concerning GCF's assets. It also proposes the establishment of a foreign exchange risk buffer for local currency funding, taking global market conditions into account. Lastly, it acknowledges the importance of factoring in relevant foreign exchange costs when determining the overall concessionality of projects and programs utilizing local currency financing.