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SSBs and Financial Inclusion

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Myra Valenzuela

on 14 September 2012

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Transcript of SSBs and Financial Inclusion

Why are SSBs important for Financial Inclusion? Key Highlights from White Paper Threats to financial integrity and international security Financial exclusion carries risks within SSBs' sphere of interest Social & political stability (potentially even financial stability) Money-laundering and terrorist financing risks of cash transactions, often across borders, through informal providers Political unrest touched off by pyramid schemes organized as informal savings and investment opportunities that trigger lack of confidence in the banking system Changing risks and benefits accompany increased financial inclusion Characteristics of financially-excluded clients Nature of products, services and providers capable of reaching financially-excluded clients Especially innovative approaches needed to accomplish significant increases in financial inclusion Benefits of financial inclusion both offset these changing risks and mitigate risks of financial exclusion Country context matters Current nature & level of financial exclusion in the country Capacity of policymakers to implement SSB standards & guidance **Advisory guidance that considers implementation challenges in various country contexts may be needed! Proportionality the balancing of risks and benefits against costs of regulation and supervision Recommendations for SSBs Risks & benefits of financial inclusion perceived and measured differently by different stakeholders Risk/benefit assessment complex across different SSBs and different products, services, and providers needed for financial inclusion Some important benefits not directly related to SSB mandates (e.g. economic growth, increased welfare) BCBS Milestones over the past 18 months August 2010: "Microfinance activities and the Core Principles for Effective Banking Supervision" published Offered guidance for the application of "Basel Core Principles on Effective Banking Supervision" (BCPs) to depository microfinance September 2012: Formal approval of revised BCPs, which reinforce the proportionality concept throughout the BCPs BCPs now accommodate more diverse range of banking systems and validates supervisory approaches that are commensurate with the risk profile and systematic importance of broad spectrum of banks CPSS IAIS IADI Working Group on Innovative Retail Payments Aims to foster an exchange of views on relevant topics of mutual interest and to keep abreast of the key global developments in retail payments Joint World Bank- CPSS Retail Forum March 2012: Working Group released report April 2012: Revised FATF mandate recognizes financial exclusion as significant risk FATF February 2012: Revised FATF Recommendations
Embraces risk-based approach that enables countries & financial institutions to adopt simplified due diligence measures where justified by a low level of risk
Permits countries to exempt financial services rendered on limited basis from most AML/CFT controls Formation of Sub-Committee on Financial Inclusion and Innovation Draft application paper on inclusive insurance markets (based on previously issued microinsurance issues papers) Fall 2011: Adoption of revised "Insurance Core Principles, Standards, Guidance and Assessment Methodology” (ICPs) making more explicit and strengthening the proportionality principle Formalization Sharing of experiences on promoting formalization of informal providers through standards and guidance Branchless Banking & Similar Innovations Coordinated guidance from multiple SSBs on proportionate regulation and supervision of new models Financial Consumer Protection Recognize unique issues financial inclusion introduces (e.g. profile of financially excluded and newly ‘included’ customers) 2009 2011 Sept. 2009 2012 2010 April 2009 June 2010 Nov. 2010 Nov. 2011 Discussions start, U.K. leading Financial Inclusion Experts Group Principles for Innovative Financial Inclusion SSBs Called to Action by G-20 (inter alia) G-20 and Financial Inclusion: Origins of GPFI June 2012 G-20 Endorses Financial Inclusion Indicators Oct. 2012 First Annual GPFI Conference on SSBs & Financial Inclusion Who are the relevant SSBs? SSB Sets standards on Basel Committee on Banking Supervision (BCBS) Financial Action Task Force (FATF) Committee on Payment & Settlement Systems (CPSS) International Association of Insurance Supervisors (IAIS) International Association of Deposit Insurers (IADI) Supervision of deposit-taking institutions Money laundering & terrorist financing (AML/CFT) Supervision of payment systems Supervision of insurance and insurers Supervision of deposit insurance schemes
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