Frontier Clearing Funds (Frontclear) - Grant

FCF aims to improve interbank liquidity in developing markets. It achieves its goals by providing USD guarantees for counterparties in certain interbank transactions. Guarantees are extended against collateral denominated in local currencies, which is often not considered acceptable collateral for interbank trades (especially given more stringent requirements under new Basel II/III regulation for OTC transactions). Apart from increasing access to capital for banks who need capital to on-lend to their clients, FCF will have the effect of strengthening financial markets by making it easier for banks to manage risks and by increasing the professionalism and transparency of financial markets in developing countries through, for example, the use of globally accepted, standardised transaction documentation. FCF is a market-based, demand-driven solution: it will be a profit-making business.