AFI was invited to present an overview of current global trends in financial inclusion at the International Association of Deposit Insurers’ (IADI) conference “Financial Inclusion: Challenges and Issues for the Deposit Insurer” on 20 June 2013 in Manila, Philippines. This was the first meeting of a standard setting body (SSB) at which AFI was invited to make a presentation.

The meeting represented an opportunity to emphasize both the impact of standards on financial inclusion and demonstrated another instance of Standard Setting Bodies (SSBs) following the G20’s call to incorporate financial inclusion into their respective mandates, as well as the efforts of the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development H.M. Queen Máxima of the Netherlands to convene SSBs for the same purpose — H.M. Queen Máxima also most recently stressed to the Financial Action Task Force (FATF) the importance of partnering with organizations such as AFI to assist with global and national initiatives on financial inclusion.

“Outreach efforts will be even more effective if coupled with technical assistance and capacity building for those countries that are in earlier stages of regulatory development,” H.M. Queen Máxima said during an address to the Plenary Meeting of the FATF. “There are also many partners to take into consideration in this process … (including) the World Bank, AFI, CGAP and the G20.”

AFI Executive Director Alfred Hannig spoke during the “Global Trends and Challenges on Financial Inclusion” session of the IADI where he not only emphasized the trend of financial inclusion increasingly becoming part of the mandate for regulators, but, among other things, also highlighted the efforts of SSBs becoming engaged in efforts to appropriately consider financial inclusion.

“Financial Inclusion is no longer only a development concern but a cornerstone of economic development framework and model … it is a policy goal complementary to stability, integrity and consumer protection,” said Mr. Hannig. “Deposit insurance directly contributes to financial inclusion by protecting small depositors, and indirectly by heightening their trust in the financial system.”

IADI representatives reacted positively to Mr. Hannig’s offer to have AFI collaborate in the review of their core principles.

AFI heeded a call from the Network to invite SSBs to a peer learning exercise to develop an extended risk framework that will:

• Recognize the comparatively low systemic risk of basic banking products targeted at the poorest consumers;
• Acknowledge the risk to socioeconomic stability that can be caused by financial exclusion;
• Take full account of the negative consequences of over-indebtedness and the importance of appropriate consumer protection measures; and
• Acknowledge the risks of migration to less integrated sectors of the banking system.

[This proposal is further described in AFI’s latest publication “Risks Redefined: AFI Member Proposal for Peer Learning with Standard-Setting Bodies (SSBs) on Extended Risk Frameworks.” The report details the highlights and conclusions of the G24-AFI High-Level Roundtable meeting held during the Spring Meetings of the World Bank-IMF in Washington D.C. in April 2013 to promote dialogue among policymakers and to consider the role of AFI members and SSBs in meeting financial inclusion objectives.]

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla later underscored during the session “Financial Inclusion and Inclusive Growth” the key role financial inclusion has in the promotion of inclusive growth in a proportionate manner. Against the background of the impact of SSBs on financial inclusion, he emphasized the need for SSBs “to be engaged to consider various country specific models in applying standards as well as consider practical challenges faced by regulators in implementation.”

In this context, BSP welcomed initiatives such as those by the G24 and AFI to develop a peer learning platform where developing country perspectives on the application of global standards could be shared.

Moving forward, the AFI proposal will be consulted with SSBs at the “Developing and Developed Country Perspectives on Financial Inclusion: A Global Dialogue” conference set to take place in Frankfurt, Germany, on 28 June 2013. Afterward, concrete implementation is expected to be launched at the AFI Global Policy Forum (GPF) to be held 10-12 September 2013 in Kuala Lumpur, Malaysia.