Multilateral development banks (MDBs) are crucial players to finance a greener, more socially inclusive and sustainable future, given their unique financial model that provides low-cost and long-term investments in areas aligned with the Sustainable Development Goals (SDGs) and the Paris Climate commitments. To fulfill their potential, MDBs need a stepwise increase in financing, which has been a challenge given the reluctance of their shareholders to provide additional paid-in capital. We present a novel proposal for MDB hybrid capital that is designed to boost MDB funding while supplying the international reserve system with a new safe asset, the Sustainable Future Bonds (SFB). Under the SFB proposal, a tiny fraction of the global foreign reserves would be rechanneled to MDBs, and given liquidity enhanced mechanisms, SFB would serve as an additional safe reserve asset for central banks' portfolios. As our conservative estimation shows, by deploying just 0.5 percent of global foreign reserves for the Sustainable Future Bonds, at least $45 billion per year in fresh capital to MDBs would be mobilized. At that pace, by 2030, MDBs will have $360 billion in capital injections, which, depending on their leverage capacity, could result in new lending from $1.6 trillion to $1.9 trillion.
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