Upon completion of this course, participants will be able to:

• Define and categorize the various **blended finance structures** (e.g., guarantees, first-loss mechanisms, concessional loans) and their regulatory implications.
• Analyze the legal and contractual documentation of blended finance deals to determine the true extent of **risk transfer** to the private sector.
• Apply the appropriate **regulatory accounting and capital treatment** for guarantees, subordinated debt, and other risk-sharing instruments under Basel/IFRS.
• Design a **risk-based supervisory framework** to monitor the ongoing performance and compliance of institutions utilizing blended finance.
• Evaluate and mitigate the potential for **moral hazard and adverse selection** introduced by public sector risk-sharing.
• Develop a policy stance on the concentration limits and appropriate use of blended finance by regulated institutions.
• Understand the reporting requirements and methodologies for measuring the **developmental impact** of blended finance structures.
• Formulate supervisory recommendations for transparent disclosure and valuation of blended finance exposures.

• Financial Supervisors and Examiners of Banks and Development Finance Institutions (DFIs).
• Regulatory Policy Developers specializing in Structured Finance and Capital Adequacy.
• Risk Managers and Financial Structuring Teams at Commercial Banks and DFIs involved in Blended Finance.
• Internal Auditors focused on the Proper Accounting of Blended Finance Instruments.
• Treasury and ALM Specialists dealing with Risk Transfer Mechanisms.

• Case Studies on Blended Finance Structuring and Regulatory Capital Treatment
• Group Activities on Analyzing Blended Finance Contractual Documentation for Risk Transfer
• Workshops on Applying Basel RWA Calculations to Subordinated and Guaranteed Tranches
• Expert Lectures on IFRS Accounting for Complex Financial Instruments (Guarantees)
• Discussions on Mitigating Moral Hazard and Adverse Selection in Public-Private Partnerships
• Individual Exercises on Designing a Supervisory Checklist for Blended Finance Compliance

Unit 1: Fundamentals and Types of Blended Finance

• Definition and policy drivers of blended finance (mobilizing private capital for SDGs).
• Categorization of instruments: concessional debt, guarantees, risk insurance, equity participations.
• Analyzing the roles and incentives of different parties (DFIs, private banks, foundations).
• Understanding the concept of **additionality** and ensuring public funds create genuine impact.
• Review of key global initiatives and platforms (e.g., OECD DAC, Convergence) in blended finance.

Unit 2: Regulatory Accounting and Risk Transfer Analysis

• Analyzing the contractual terms to determine the effective **risk-sharing and transfer** in a blended structure.
• Applying regulatory capital rules (e.g., Basel III) to calculate the Risk-Weighted Assets (RWA) for retained and transferred tranches.
• IFRS accounting principles (e.g., IFRS 9) for loan classification, impairment, and recognition of guarantees.
• Supervisory protocols for reviewing the accuracy of fair value measurement for complex blended instruments.
• Identifying regulatory arbitrage risks in the capital treatment of blended structures.

Unit 3: Risk Assessment and Supervision Methodology

• Developing a specialized **risk-based supervisory checklist** for blended finance exposures.
• Monitoring the performance of underlying assets and the likelihood of trigger events in structured deals.
• Assessing the **counterparty risk** associated with the public sector entity providing the guarantee or first-loss piece.
• Evaluating the adequacy of the regulated institution's internal controls and governance over blended finance.
• Protocols for reviewing and challenging the institution's internal credit risk modeling assumptions for these structures.

Unit 4: Moral Hazard and Governance Challenges

• Analyzing the potential for **moral hazard** (private sector taking excessive risk due to public guarantee).
• Assessing **adverse selection** (public funds supporting only unviable projects).
• Developing supervisory tools to ensure **transparency and disclosure** of concessional elements and subsidies.
• Evaluating the governance framework for internal decision-making on blended finance deals.
• Policy mechanisms for ensuring the sustainability and non-distortionary effect of public subsidies.

Unit 5: Policy Formulation and International Cooperation

• Formulating regulatory policy on the treatment, reporting, and concentration limits for blended finance exposures.
• The role of cross-border supervision and Memorandum of Understanding (MOUs) in overseeing multilateral blended deals.
• Reviewing global standards and ongoing regulatory discussions on the prudential treatment of development finance.
• Designing reporting templates to capture both the financial risk and the developmental impact metrics.
• Translating supervisory findings into industry best practices and guidance for market participants.