Financial inclusion is an issue of growing importance to policymakers due to its potential to contribute to key development objectives such as economic growth and increased welfare. At the same time, the global financial crisis has highlighted the need for responsible delivery of financial services. In late 2008 and 2009, as the G-20 moved decisively to assume the role of chief shaper of the international financial architecture, these two closely tied policy priorities – financial inclusion and responsible finance – began to emerge as increasingly important for the powerful global body.
At their Pittsburgh Summit in September of 2009, the G-20 Leaders issued their first pronouncement on financial inclusion and committed to improving financial services for the poor. In November of 2010, the G-20 Leaders confirmed their commitment to financial inclusion by approving a Financial Inclusion Action Plan, and creating a new body to implement it: the G-20 Global Partnership for Financial Inclusion (GPFI). CGAP is one of five key implementing partners for the GPFI, along with the Alliance for Financial Inclusion (AFI), International Finance Corporation (IFC), the Organisation for Economic Co-operation and Development (OECD)and the World Bank.
The GPFI is currently comprised of four Subgroups, G-20 Principles and Standard Setting Bodies, SME Finance, Financial Inclusion Data and Measurement, and Financial Consumer Protection and Financial Literacy. CGAP is involved in all current Subgroups, and is the lead Implementing Partner for the workstream on engagement with the standard setting bodies (SSBs). The objective of this workstream is to support and catalyze the SSBs – such as the Basel Committee on Banking Supervision (BCBS), the Financial Action Task Force (FATF) and the Committee on Payment and Settlement Systems (CPSS) - to incorporate consideration of financial inclusion into their normative standards and advisory guidance, and to improve the treatment of financial inclusion in all types of financial sector assessments. During the Los Cabos Summit in June 2012, the G-20 Leaders voiced support for efforts to establish a fourth GPFI Subgroup with a focus on consumer protection and financial literacy issues which will support the work of the other Subgroups on these topics of such importance to responsible financial inclusion.
Perhaps nowhere is the importance of the G-20’s commitment to responsible financial inclusion more evident than with the SSBs. These global bodies have significant influence on how many poor households get access to what range and quality of formal financial services, and at what cost. For example, FATF, which is the SSB that provides the framework for country-level regulation on Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT), sets global norms on “Know Your Customer” or KYC requirements. These requirements can determine which cost-lowering business model innovations - such as mobile financial services or service delivery through retail outlets - are viable means of reaching financially excluded households, and which are not.
As part of its work with the SSBs, CGAP led the development of a white paper on behalf of the GPFI, Global Standard-Setting Bodies and Financial Inclusion for the Poor – Toward Proportionate Standards and Guidance.
In the short period since its launch in late 2010, the GPFI has already emerged as an important global force for financial inclusion: At their Cannes Summit in November 2011, the G-20 Leaders reiterated their ongoing support for responsible financial inclusion, endorsing all of the recommendations put forward by the GPFI. During the Los Cabos Summit in June 2012, the Leaders reaffirmed their commitment to full implementation of the 2011 recommendations and specifically endorsed the G-20 Basic Set of Financial Inclusion Indicators developed by the GPFI.
For the latest information on the GPFI please visit www.gpfi.org.
Program Contact: Tim Lyman