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State Investment Banks (SIBs) are government-owned financial institutions focused on encouraging investment in green and sustainable projects and facilitating the sustainable transition to achieve Paris Agreement's targets. SIBs can play a key role in closing the financing gap in low-carbon projects and leverage additional private finance. Responsibilities from SIBs include capital provision, de-risking, education, signaling, and early mover functions.

Capital Provision Role
SIBs provide financial support for projects with significant upfront costs. They help fill the investment gaps, especially du ring economic downturns. This role aligns with the idea that public finance can overcome structural barriers related to high capital expenses.

De-Risking Role
SIBs reduce risks associated with low-carbon projects, making them more attractive to private investors. Different SIBs use various de-risking instruments to achieve this, such as concessional finance or guarantees. De-risking not only lowers financing costs but also encourages private investment in riskier projects.

Educational Role
SIBs play an educational role, both internally and externally. They cultivate in -house expertise to assess risks accurately and standardize de-risking instruments. This knowledge is shared within the industry, helping investors assess risk and aiding developers in due diligence, making projects more attractive to financiers.

Signaling Role
SIBs co-finance projects and build a reputation for expertise. When they decide to invest in a project, it signals trustworthiness to other investors. This signalling role attracts additional funding from previously disinterested investors. This may even lead to oversubscription and exclusion of SIB itself.

First or Early Mover Role
SIBs often take on the risk of being the first to invest in innovative or novel projects. By doing so, they demonstrate that these projects can succeed, leading to a track record that encourages private investment in future similar projects, thus enhancing innovation diffusion.