Global Bodies and Financial Inclusion
Financial inclusion is an issue of growing importance to policy makers 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 G20 assumed the role of chief shaper of the international financial architecture, 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 G20 Leaders issued their first pronouncement on financial inclusion and committed to improving financial services for the poor, establishing a one-year Financial Inclusion Experts Group (FIEG) and naming CGAP and the International Finance Corporation (IFC) as its initial implementing partners. To broaden inputs beyond the G20, the Alliance for Financial Inclusion (AFI) was invited to join CGAP and IFC in contributing to the FIEG’s work. By June of 2010, the FIEG developed nine “Principles for Innovative Financial Inclusion,” distilled from CGAP’s prior work on branchless banking and a survey of AFI’s members, which were adopted by the G20 Leaders at the June 2010 Toronto Summit.
The Global Partnership for Financial Inclusion
In November of 2010, the G20 Leaders confirmed their ongoing commitment to financial inclusion by approving a Financial Inclusion Action Plan, and creating a new standing body to implement it: the G20 Global Partnership for Financial Inclusion (GPFI). In the short period since its launch in late 2010, the GPFI has emerged as an important global force for financial inclusion, with its recommendations endorsed at every subsequent G20 summit. At their Brisbane Summit in November 2014, the G20 Leaders reaffirmed financial inclusion as a key element in the body’s broader development agenda, approving a revised Financial Inclusion Action Plan that retains a strong focus on regulation and standard-setting.
The GPFI is currently comprised of the following Subgroups, charged jointly with implementing the revised G20 Financial Inclusion Action Plan:
- Regulation and Standard-Setting Bodies
- SME Finance
- Financial Consumer Protection and Financial Literacy
- Markets and Payment Systems
CGAP is involved in all the Subgroups, and is the lead Implementing Partner for the Subgroup on Regulation and Standard-Setting Bodies (SSBs). The objective of this Subgroup is to support and catalyze the SSBs 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.
United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development
Her Majesty Queen Máxima of the Netherlands is the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). Since June 2011, she has also been Honorary Patron of the GPFI in her capacity as UNSGSA, and her main function in the two capacities is to strengthen the synergy between the UN and the G20 nations on promoting universal access to financial services. She also uses her UN and G20 roles to promote understanding of the complementarity of financial inclusion, integrity, and stability, and the CGAP Global Policy Architecture Initiative supports her in this work. Queen Máxima collaborates closely with an advisory Reference Group of leading international organizations in financial inclusion, in which CGAP participates. The purpose of the Reference Group is to share expertise and suggest strategic opportunities that the UNSGSA can advance through advocacy and partnerships.
Financial standard-setting bodies and financial inclusion
Global financial SSBs have significant influence on country-level policy environments, affecting both the business case for providers and the value proposition of formal financial services for customers. For example, the Financial Action Task Force (FATF), which is the SSB that provides the framework for effective country-level implementation of legal, regulatory, and operational measures on anti-money laundering and combating financing of terrorism (AML/CFT), sets global norms on “customer due diligence” or CDD requirements. These requirements can determine which cost-lowering business model innovations - such as digital financial services or service delivery through retail outlets - are viable means of reaching financially excluded households, and which are not.
The seven global bodies that are most relevant to financial inclusion are:
- Financial Stability Board (FSB)
- Basel Committee on Banking Supervision (BCBS)
- Committee on Payments and Market Infrastructures (CPMI, formerly the Committee on Payment and Settlement Systems or CPSS)
- Financial Action Task Force (FATF)
- International Association of Deposit Insurers (IADI)
- International Association of Insurance Supervisors (IAIS)
- International Organization of Securities Commissions (IOSCO)
CGAP’s engagement with the SSBs focuses on the cross-cutting issues that are relevant to all SSBs, such as the risks posed by financial exclusion, and breaking down the silos among the global bodies. In 2016, CGAP led the update of a white paper on behalf of the GPFI, Global Standard-Setting Bodies and Financial Inclusion: the Evolving Landscape, which examines the new challenges in the changing landscape of digital financial inclusion and the implications for the SSBs.
- 2016 GPFI White Paper blog series – Standard Setters and Inclusion
- 2014 G20 Financial Inclusion Action Plan
- Global Standard-Setting Bodies and Financial Inclusion: the Evolving Landscape
- Global Standard-Setting Bodies and Financial Inclusion for the Poor – Toward Proportionate Standards and Guidance
- First GPFI Conference on SSBs and Financial Inclusion: Promoting Financial Inclusion Through Proportionate Standards and Guidance
- Second GPFI Conference on SSBs and Financial Inclusion: Standard Setting in the Changing Landscape of Digital Financial Inclusion
- Third GPFI Conference on SSBs and Financial Inclusion: New Frontiers in the Supervision and Oversight of Digital Financial Services