Stabilizing Interbank Markets in the Frontier
- FrontClear provides counterparty guarantees for short to medium term (up to 1 year) interbank transactions in frontier markets
- It was established in 2015. FrontClear is managed by a dedicated team of 6 professionals in AMsterdam
- FrontClear’s funding partners include 5 DFIs (AFD/Proparco, EBRD, FMO, KfW and TCX) and one donor institution (FSD Africa, funded by DFID)
- USD 100 million counter-guarantee from KfW
Frontclear is a development finance fund established to address the lack of access to financing by local banks and NBFIs in frontier markets. FrontClear’s mission is to facilitate the scaling up of liquidity by local financial institutions by providing counterparty guarantees covering interbank transactions (such as repo’s, FX and interest rate swaps or collateralized loans). FrontClear’s exposure is uniquely mitigated using local currency domestic securities as collateral.
Lack of access to financing at reasonable terms can lead to a lack of understanding, lack of skill, lack of regulation, and lack of legal context to facilitate well-functioning interbank markets. This means that just offering credit support will not be enough. FrontClear actively provides technical assistance to all stakeholders engaged in this process.