Rolling out the Wall Street Consensus? Multilateral development banks and the trilemma of private capital mobilization

Abstract

This article offers the first comprehensive account of the challenges Multilateral Development Banks (MDBs) face in implementing the Wall Street Consensus, a financialized approach that seeks to leverage billions of public resources to mobilize trillions in private finance, for achieving the Sustainable Development Goals in low- and middle-income countries. We argue that, despite the strategic pivot towards blended finance, MDBs have struggled to scale private capital mobilization, constrained by a trilemma: (1) maximizing external development finance, (2) derisking private finance, and (3) preserving their traditional business model. We challenge assumptions about the linear, inevitable roll-out of securitization in global development finance, and argue that the future of the Maximizing Finance for Development agenda is more open and (geo)politically contested than assumed. Our analysis, based on a thematic content analysis of MDB documents and expert interviews, reveals a lack of support among MDB shareholders and policy experts to the notion of shifting away from their traditional “originate-and-hold” lending model towards an “originate-to-distribute” model of portfolio derisking. As a result, political momentum has shifted towards proposals that seek to leverage and/or strengthen the traditional MDB business model through capital adequacy reforms and general capital increases.