The Central Bank of the Russian Federation (CBR) successfully hosted the 23rd International Banking Congress, held June 30-July 2 in St. Petersburg, under the theme “New Realities for the Banking Industry.” An active AFI member institution, CBR highlighted among many discussions the issue of shadow banking and the importance of strengthening regulation and supervision along with the role of financial inclusion.

The conference convened more than 500 policymakers, scholars and financial sector executives from around the world, as well as AFI members from Armenia, Belarus, Kyrgyz Republic, Russia and Tajikistan. It also featured high-level speakers and participants including: Elvira Nabiullina, Governor at the CBR; Jaime Caruana, General Manager at the Bank for International Settlements (BIS); Jacob Frenkel, Chairman of JPMorgan Chase International; and Dr. Alfred Hannig, Executive Director at AFI.

Dr. Hannig moderated the “Shadow Banking and Financial Inclusion” session that addressed the nature of complementarity and competition between the traditional banking sector and non-bank financial institutions, and the role of financial inclusion. Expert panelists clarified the concepts of financial inclusion and shadow banking, discussed the experience in Russia and other countries, and arrived at a consensus that shadow banking when regulated in a balanced, proportionate and differentiated way can play an important role in serving diverse underbanked and unbanked populations as banks continue to move away from certain products and services. Financial inclusion regulation actually can decrease regulatory arbitrage in the shadow banking sector.

“Shadow banking is an important issue for many AFI members, including in Russia, China, India, Malaysia and other countries which might warrant more systematic exchange of experience,” said Dr. Hannig. “Smart regulation can bring the non-banking sector out of the shadows to advance financial inclusion.”

During the session participants also explored topics such as digital payments and consumer protection, issues of key interest to the Eastern Europe and Central Asia region, as well as in numerous other developing and emerging economies.

“For the Central Bank of Russia expanding and improving digital finance and consumer protection as well as peer learning with standard setting bodies are high priorities,” said Sergey Shvetsov, First Deputy Governor at CBR. “We look forward to learning from the experiences of other AFI member institutions and to sharing Russia’s expertise.”