FX EDGE: IDB’s Global Platform to Combat Currency Risk and Boost Sustainable Investment

The Inter-American Development Bank (IDB) has unveiled FX EDGE, a landmark initiative aimed at eliminating one of the greatest deterrents to private investment in emerging markets: currency volatility. The platform, launched with backing from Brazil and the United Kingdom, offers a groundbreaking solution to help countries attract greater private-sector financing for sustainable development projects through a suite of financial and risk-management tools.

A Platform Built for Resilience and Scale

At its core, FX EDGE provides a flexible and scalable toolkit tailored to the needs of developing economies. It blends finance, offers contingent liquidity, and facilitates access to long-term hedging instruments—all essential to building resilience against foreign exchange (FX) risk.

Key components of the FX EDGE package include:

• Blended-Finance and Project-Preparation Facility: This enables countries to design bankable projects by improving market readiness, leveraging co-investment, and delivering robust project pipelines aligned with sustainable development goals.

• FX Liquidity Facility: Designed as a contingent credit line, this activates in times of currency depreciation, allowing projects with local-currency revenues to continue servicing foreign-currency debts during market shocks—thus preserving financial health and project continuity.

• FX Derivatives Program: This facilitates long-term currency hedging, using the credit strengths of IDB and other multilaterals to de-risk currency mismatches. Instruments will be channeled through local central banks and financial institutions, fostering local capacity while maintaining investor confidence.

From Brazil’s Eco Invest to Global Impact

FX EDGE builds upon the successful model of Eco Invest, a collaboration between the IDB and the Brazilian government, supported by technical cooperation from the UK. Brazil’s experience has laid the groundwork for a global solution.

Eco Invest's first blended-finance auction is already on track to mobilize $8 billion in private investment over the next two years. A second auction focused on restoring degraded lands is underway, particularly targeting the Amazon region, with future rounds expected. These auctions are accompanied by FX risk management mechanisms, proving that properly structured public-private partnerships can attract capital at scale.

Brazil’s role as co-implementer of FX EDGE in Latin America and the Caribbean highlights a commitment to regional cooperation. The country’s Ministry of Finance is integrating FX EDGE within its ambitious “New Brazil – The Ecological Transformation Plan,” aiming to make Brazil a leader in the global low-carbon economy.

International Backing and Global Vision

The platform enjoys robust international support, particularly from the UK’s Sustainable Infrastructure Programme, which is funding technical assistance and financial structuring across Latin America and the Caribbean.

IDB President Ilan Goldfajn highlighted the strategic significance of FX EDGE:

“What began as a partnership in Brazil is now scaling up, backed by strong demand, multilateral cooperation, and a clear focus on impact.”

UK Minister for Development Jenny Chapman emphasized the platform’s innovation in unlocking capital:

“This partnership is a great example of how we can innovate together to reduce barriers to investment and mobilize more private-sector finance.”

Meanwhile, Brazil’s Finance Minister Fernando Haddad underscored the country’s pride in seeing its domestic innovation go global:

“By sharing this journey, we help other countries find ways to enable financing for the sustainable transition.”

Advancing the Financing for Development Agenda

By directly addressing FX risk—a core obstacle to sustainable investment—FX EDGE empowers countries to pursue long-term development goals with renewed confidence. It contributes to the Financing for Development agenda by:

• Mobilizing international capital at scale

• Enhancing financial resilience for project developers

• Enabling countries to attract private-sector funding on more favorable terms

Looking Ahead

As global demand grows for climate-smart infrastructure and sustainable solutions, FX EDGE offers a critical bridge between capital markets and development aspirations. With its multi-stakeholder support and replicable framework, FX EDGE has the potential to reshape investment landscapes across the Global South, helping unlock billions in private capital while safeguarding economic sovereignty and financial stability.