World Bank and ISDA Join Forces to Expand Risk Management Tools

The partnership brings together global financial expertise and development support to help countries build stronger capital markets, manage financial risks more effectively and attract greater investment.

The World Bank Group and the International Swaps and Derivatives Association (ISDA) have signed a Memorandum of Understanding (MoU) to help emerging markets and developing economies strengthen their financial systems by improving access to international derivatives markets. The partnership brings together global financial expertise and development support to help countries build stronger capital markets, manage financial risks more effectively and attract greater investment.

The agreement involves the World Bank Group institutions—the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA) and the International Finance Corporation (IFC). Together with ISDA, they will support countries in creating the legal, regulatory and institutional foundations needed for well-functioning derivatives markets.

Better risk management can unlock investment and growth

Derivatives play an important role in helping businesses and governments protect themselves against currency fluctuations, changing interest rates and price volatility. Stronger derivatives markets also make it easier to access local currency financing, giving companies more confidence to invest, expand operations and create jobs.

Many developing economies still face barriers that limit the growth of these markets. A 2023 ISDA survey found that 19 of the 44 emerging and developing economies surveyed restrict the types of market participants that can use derivatives, reducing opportunities for businesses to manage financial risks. The new partnership seeks to address these gaps by encouraging reforms that make financial markets more stable, transparent and accessible.

Training, research and legal reforms form the roadmap

Under the agreement, the World Bank Group and ISDA will work together on policy discussions, research, technical training and capacity-building programmes. Workshops, seminars and educational initiatives will focus on derivatives, financial risk management and the use of standard ISDA documentation. The collaboration will also produce joint market research while engaging governments and regulators on legal and regulatory reforms, including frameworks that support close-out netting and other key market protections.

World Bank Group Vice President and Treasurer Jorge Familiar said stronger derivatives markets help countries manage borrowing and investment risks while improving long-term financial planning. ISDA Chief Executive Officer Scott O'Malia added that robust legal and regulatory systems are essential for effective derivatives markets, allowing businesses to manage risk more confidently while supporting financial stability and economic development. The agreement strengthens the World Bank Group's broader efforts to support capital market development and improve financial resilience across developing economies.