The Legal Entity Identifier (LEI) is a 20-character alphanumeric code developed based on the international standard ISO 17442, drafted by the International Organization for Standardization (ISO) in the wake of the 2008 global financial crisis. These financial codes, while simple in form, are of great importance in addressing systemic challenges, including those related to climate change.
After the 2008 crisis, it became clear that the excessive complexity of financial instruments, mechanisms and actors constituted a serious obstacle to transparency and stability. The lack of a unified mechanism for identifying legal entities involved in financial transactions on a global scale resulted in the weakening of supervisory and risk management capacities.
In this context, the LEI system was created with the aim of increasing transparency and improving risk monitoring in the international financial system. The LEI code enables the unique identification of any legal entity, including information such as name, ownership structure and links to other entities. The data is publicly accessible and free of charge through the Global LEI Index.
The use of LEIs contributes to providing more accurate and standardized financial data, empowering regulatory authorities and relevant institutions to better assess systemic risks, identify early trends and take rapid and effective preventive measures.
Furthermore, studies have shown that the widespread use of LEIs can bring concrete economic benefits, including a potential savings of up to $4 billion in the global banking sector, as a result of improved efficiency and reduced operational complexity.
Recently, the LEI code has also evolved into its verifiable digital form (vLEI), an innovation that enables automatic and secure identification in real time, significantly reducing the possibility of errors and accelerating transactional and administrative processes.
Beyond the financial sector, the widespread use of LEIs has been identified as a key factor in building sustainable economies, which will increasingly depend on accurate, transparent and interoperable data to address climate risks and seize the green opportunities of the future.
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