Exploring New Knowledge Bridges in the Western Balkans

Stone bridge in Prizren, Kosovo.
Stone bridge in Prizren, Kosovo.

Exploring New Knowledge Bridges in the Western Balkans

By Alfred Hannig

The Alliance for Financial Inclusion (AFI) has always been recognized as a network made up of policymakers from ‘developing and emerging countries’, however we also recognize that financial inclusion is a global issue, one that can have an impact on people in every country. As our network has grown, there has been an increasing demand from policymakers and regulators from higher income countries in creating new knowledge bridges to the “global South”.

At the same time, AFI members have begun to emphasize their interest in establishing a more systematic knowledge exchange with regulators and policymakers from developed economies. This change should come as no surprise, as we have seen how the global community has embraced financial inclusion as the cornerstone of inclusive economic growth, stability and integrity. In other words, financial inclusion is in the interest of all, not just the poor.

During our recent visit to central banks in three Western Balkan countries (Montenegro, Kosovo, Croatia) it was clear that financial inclusion is a relevant and pressing issue across the region and the policymaking and regulatory institutions we spoke to are all very actively engaged in projects to reduce their unbanked populations. However, the financial inclusion landscape in the region is surprisingly heterogeneous. Consequently, the financial inclusion challenges differ, and the policy priorities the central banks in the region are addressing are diverse, covering a wide range of topics such as digital financial services regulation, including FinTech/RegTech and AML/CFT issues, consumer protection and financial literacy, cross border remittances, as well as SME and green finance.

Interestingly, central banks in the region are using many knowledge products, policy ideas and regulatory solutions which have been designed and tested by AFI members, and which are grounded in empirical evidence from developing and emerging countries. During our trip, high-level representatives from central banks identified AFI as a source of highly relevant and in some cases the best source of information available to them. It was also clear that the region appreciates the principles of the AFI cooperation model, built around knowledge exchange, peer learning, and targeted financial and technical resources, and is using this model to scale up of effective policy and regulatory solutions at an unprecedented rate.

What does this imply for AFI’s engagement with central banks in the Western Balkans?

First, full AFI membership is an opportunity for those central banks who face challenges similar to the AFI members in policy areas such as digital financial services regulation, SME Finance, financial education, and green finance.

Second, Western Balkan countries can offer AFI a regional engagement platform to bring financial inclusion policy topics to the broader agenda of regular or stand-alone regional events.

Third, alignment with EU regulations for some countries in the region may limit their ability to systematically and fully engage in AFI activities, however, there is a strong interest in exploring alternative ways to collaborate and engage in mutual knowledge exchanges (e.g. through presentation to working groups or attendance at AFI events across the globe).

In conclusion, it is my view that further engagement with Western Balkan countries can be of great benefit for AFI’s membership. The appetite from countries in the region to either join AFI or take part in exchanges at the technical level was strong, and a variety of engagement scenarios should be explored. Of course we must ensure that any activates are properly resourced and that they result in tangible and targeted benefits for the network, however, a stronger engagement with the Western Balkan countries either through membership or alternative forms of participation in the network could ultimately take us a step closer to AFI’s vision of a truly global financial inclusion organization.