Head of Brazil’s Central Bank Financial Inclusion Team Speaks to CGAP

We recently spoke with Elvira Cruvinel, head of a new Brazilian Central Bank team coordinating financial inclusion efforts. Only a handful of countries globally have created such financial inclusion teams at central banks. Elvira is part of this small pioneering group of leaders looking to effect major changes to the financial access landscape.

1. What is the Brazilian Central Bank’s vision of financial inclusion?

In recent years, the Central Bank of Brazil has determined that the promotion of financial inclusion is a strategic contribution to the development of the Brazilian economy. We believe that adequate financial inclusion helps reduce poverty, since meeting the demand for financial services can improve quality of life and the development of the financial industry can spur economic growth. We also believe that financial inclusion is beneficial to economic stability, financial system efficiency and the effectiveness of monetary policy instruments.

2. Your team was created in 2009. What have you been able to do since then?

In 2009, we created the Financial Inclusion Project at the Central Bank, after realizing that it was necessary to integrate various stakeholders to develop effective policies for financial inclusion. This required a great deal of interdepartmental coordination and collaboration with other institutions, both national and international. Another major part of our effort was the collection, organization and analysis of data and research on various issues related to the subject. At the end of that first year, we published the book “Perspectives and Challenges for Financial Inclusion in Brazil: a view of different actors.”

Through our efforts that first year, we were able to solidify the Central Bank’s role on this issue in Brazil. In my opinion, our role in pulling stakeholders together showed clearly in Brazil’s first Forum on Financial Inclusion in 2009, which was organized by the Central Bank but involved multiple ministries and hundreds of participants across industry and policy circles. The second Forum, held in 2010, also shed light on regulatory issues, allowing for the definition of a financial inclusion agenda in Brazil. The third Forum, carried out in November 2011, shed light on ways to measure financial access, the quality of inclusion and products.

As part of pulling the Forums together, we took important steps towards our objective to improve our data on financial inclusion. The 2010 Forum (II Forum on Financial Inclusion) led to the publishing of our first Financial Inclusion Report with first-of-its kind detail maps of financial infrastructure coverage in Brazil. The most current forum (III Forum on Financial Inclusion) led to the publishing of a second financial inclusion report which built upon the data from the first report.

In addition to all this, in 2010, along with Australia, we led the Access Through Innovation Sub-Group (ATISG) of the G20’s Financial Inclusion Experts Group (FIEG), which addressed the relationship between financial inclusion and technological innovations in financial service provision. This sub-group carried out meetings and consultations with international partners to develop principles for policies aimed at financial inclusion and a pragmatic action plan, supported by the G20. In September 2010, we became a member of the Alliance for Financial Inclusion (AFI). This led to the creation of the G20’s Global Partnership for Financial Inclusion, where we are playing a leading role. In addition, we currently launched the National Partnership for Financial Inclusion, in which we have brought together key stakeholders in Brazil to advance the topic of financial inclusion on a national level.

3. What are the challenges in financial inclusion in Brazil?

Our research shows that Brazil has performed positively in terms of financial inclusion, both in terms of access (and reach of the financial system) and use. Nonetheless, a significant portion of the population and households still remain financially excluded. To get a more accurate picture on financial exclusion, it is necessary to gather household-level data in order to highlight people’s difficulties in accessing basic financial services. There is also a lack of microcredit-related data, particularly on institutions that are not supervised by the Central Bank. Thus, the improvement of data on financial inclusion is undoubtedly the most immediate challenge to overcome, particularly because without good data, it is impossible to define indicators to build a proper financial inclusion agenda for the country.

4. What are your plans to overcome these challenges?

We have identified four concrete areas of action: (i) improve data on financial inclusion; (ii) scale up microcredit (there are still unmet demand here especially in rural areas) and savings services; (iii) make supervisory tools adequate; and (iv) strengthen financial education and consumer protection institutional structures.

In addition to information on the supply of financial services provided in the Financial Inclusion Reports, we need information on the demand for financial services and real financial needs of people. The improvement of access must be accompanied by the analysis of the needs and expectations of the people (especially those completely cut off from financial services) and regional and demographic idiosyncrasies.

In terms of data and analysis, we are working on what we see as two interrelated fronts: actions aimed at mapping the Brazilian financial inclusion reality and on studies aimed at improving the regulatory framework. We are currently working to develop large-scale research that can measure, as completely as possible, financial inclusion in different regions of the country, as well as measure its impact (positive and negative) on society and the economy. We believe that such information can be helpful to investors, financial institutions and academic research in addition to government agencies.

Read more about financial inclusion in Brazil in Portuguese at our blog on Financial Inclusion, developed with FGV’s Center for Microfinance Studies.