Under the right circumstances, financial inclusion, stability, integrity, and consumer protection (collectively referred to as I-SIP) can be positively related, and the failure to consider any one of these objectives can lead to problems. Since 2012, CGAP has been exploring the relationships, or linkages, among these key objectives of financial policy making. We have analyzed several policy interventions (laws and regulations) in South Africa, Pakistan, Russia, and the Philippines to better understand how the four objectives are related and how policy makers have been balancing them. Based on this research, CGAP developed an approach to designing or adjusting financial-sector policies that involves identifying, managing, and optimizing the linkages among the I-SIP objectives triggered by a given policy intervention: the I-SIP Approach.
This CGAP and Bangko Sentral ng Pilipinas (the central bank of the Philippines) report presents findings from an I-SIP research exercise in the Philippines. It shows how Philippine policy makers have been balancing the four financial-sector policy objectives in their policy-making efforts as exemplified by five policy interventions:
- Mandated agricultural credit
- National Strategy for Microfinance
- Electronic money guidelines
- Regulations for microbanking offices
- Draft regulations for pawnshops
The Philippines I-SIP research reaffirmed the usefulness of following a systematic approach. Where a systematic approach was followed, whether intentionally or not, more positive effects on all four I-SIP objectives could be observed. When I-SIP propositions had not been considered, it was more difficult for policy makers to use a proportionate approach to regulate and supervise financial-sector actors.
The case of the Philippines is unique in that the country already has an established, structured consultative process and associated multi-stakeholder coordination and implementation bodies that develop national strategies for microfinance, microinsurance, and financial inclusion. This provides a strong foundation for integrating the I-SIP Approach into regular policy making in the country.
The analysis and findings presented in this report should be useful to national policy makers as they work to advance financial inclusion in their countries and face challenges of balancing this objective with the objectives of stability, integrity, and consumer protection.