IDB and CEB Launch €500M Risk-Sharing Deal to Boost Global Lending

In a groundbreaking financial cooperation between multilateral lenders, the Inter-American Development Bank (IDB) and the Council of Europe Development Bank (CEB) have signed a €500 million Exposure Exchange Agreement (EEA)—marking a significant advancement in global development finance. The landmark deal, signed on the sidelines of the Heads of Multilateral Development Banks (MDBs) Group meeting in Paris, sets three historic firsts: it is the first EEA transaction in euros, the first of its kind for the CEB, and the first bilateral deal between the IDB and CEB.

This pioneering agreement is poised to reshape how development banks manage risk and optimize capital, opening the door for greater and more geographically diversified development financing.

What Is an Exposure Exchange Agreement?

An Exposure Exchange Agreement (EEA) is a strategic financial tool that allows MDBs to swap portions of their risk exposure across different regions without transferring underlying assets. The goal is to reduce portfolio concentration, promote regional diversification, and free up capital to be reallocated to other development priorities. The exchange is synthetic—meaning no actual loans or assets are moved between institutions—ensuring that the original lender retains the borrower relationship and operational oversight.

For regional MDBs like the IDB and CEB, which often face constraints in portfolio diversification, EEAs represent a powerful solution to managing credit risk more efficiently.

A First-of-Its-Kind Transaction

“This agreement is a milestone: it’s the first-ever exposure exchange in euros and our first with the CEB,” said IDB President Ilan Goldfajn. “By sharing risk, we strengthen both institutions’ balance sheets and expand our ability to deliver impact. For the IDB, this means $2 billion more over a decade in critical additional capacity to support Latin America and the Caribbean.”

The €500 million exchange will allow the IDB to reduce its concentrated exposure in the Latin American region, while the CEB diversifies beyond its traditional European borrower base—without taking on actual cross-border loan portfolios.

CEB Governor Carlo Monticelli echoed the importance of the agreement:

“Exposure Exchange Agreements are a powerful demonstration of how working together makes us more efficient and resilient. This partnership with the IDB will strengthen the CEB’s ability to support its borrowers and invest in projects that foster Europe’s social cohesion and sustainable development.”

Strategic Benefits and Development Impact

This deal illustrates how MDBs are increasingly turning to innovative capital optimization techniques to maximize development impact amid growing global financing needs. By reducing the capital required to maintain certain high-risk exposures, both institutions unlock new lending capacity. The IDB estimates this will translate into up to $2 billion in additional lending for Latin America and the Caribbean over the next ten years.

For the CEB, the agreement allows it to diversify risk without departing from its core European mission. This, in turn, strengthens its ability to fund projects focused on social cohesion, climate adaptation, and economic resilience across its member states.

The EEA model also supports MDBs’ alignment with G20 reform efforts to expand their development capacity, as highlighted in the recently updated G20 Roadmap for Better, Bigger, and More Effective MDBs.

A Growing Tool in Multilateral Finance

While EEAs are relatively new, they are gaining traction among MDBs as a strategic means to enhance financial resilience and increase development impact without requiring new capital injections. This euro-denominated transaction could set a precedent for other regional development banks, especially in Africa, Asia, and the Middle East, to explore similar arrangements.

The transaction was designed with transparency and operational continuity in mind. Since no legal ownership of the loans is transferred, the regulatory compliance and borrower relationships remain unaffected, minimizing legal complexity and ensuring seamless implementation.

Global Cooperation in Action

The announcement of the IDB–CEB EEA comes at a time when MDBs are actively exploring new instruments to tackle pressing global challenges—from climate change and forced displacement to fragile economies and widening inequality. The meeting of the Heads of MDBs Group in Paris underscored the shared ambition of institutions to operate more cohesively as a system, using collaborative tools to scale up development finance and amplify regional impact.

This partnership is a clear reflection of that ambition.

Looking Ahead

As MDBs push forward with reforms and innovations to meet the Sustainable Development Goals (SDGs) and other urgent global targets, Exposure Exchange Agreements could play an increasingly central role in de-risking lending operations and unlocking untapped capital.

With this historic deal, the IDB and CEB not only advance their respective mandates but also set a blueprint for future cooperation in a rapidly evolving global financial landscape.