Norbert Mumba, Deputy Executive Director, AFI delivers opening remarks during CEMCWG and GSPWG virtual meeting, 09 March 2021.

10 March 2021

Consumer Empowerment and Market Conduct Working Group (CEMCWG) and Global Standards Proportionality Working Group (GSPWG) virtual meeting

 

Opening remarks by Norbert Mumba, Deputy Executive Director, AFI

 

Honorable Presidente, Mr. Douglas Rodríguez, Banco Central De Reserva De El Salvador, Chair & Co Chairs of the Consumer Empowerment & Market Conduct and the Global Standards Proportionality Working Groups, Members of the Working Groups, Ladies and Gentlemen,

Buenos Dias, good day to everyone and it is with great pleasure that I welcome you to the first virtual Working Group Meeting of 2021. Allow me to express my sincere gratitude to the Honorable Presidente del Banco Central De Reserva De El Salvador, Mr. Douglas Rodríguez as well as the team for their excellent support to virtually co-hosting this first series of working group meetings. While we would have loved to be physically present in your beautiful country, for now this virtual engagements should suffice and hope that we would be meeting face to face soon.

The Banco Central de Reserva de El Salvador (BCRES) has been part of the AFI network since June 2012 and active across all 7 working groups. The Central Reserve Bank of El Salvador has been very supportive to the network, driving initiatives within the LAC region and has contributed significantly under the leadership of Hon. President and Vicepresident. We are grateful for this support and your sharing thoughts at this event is a mark of commitment to the work of AFI  as it is important to learn lessons of your progress and decisions taken in order to respond as regulators for the challenges faced in  2020. I also thank everyone for taking their time to attend this meeting. 

The year 2020 was unique for AFI in a variety of ways, particularly due to the consequence of the global COVID-19 pandemic. Unprecedented challenges were recorded in the financial sector ecosystem, placing a demand on regulators in AFI member countries to respond appropriately with actions, policies, and interventions to ensure business continuity, market stability and consumer protection. In search of solutions to the challenges we encountered in 2020, saw cease  opportunity to broaden the availability, access, and usage of digital financial services to citizens particularly  MSMEs, women and vulnerable groups. While the global situation remains fluid, with uncertainties due to COVID-19 persisting into 2021, we should see this as an opportunity to intensify our efforts on development of policy and interventions that will focus at recovery. The crisis gives us an opportunity to reposition ourselves to build a better normal.

During the pandemic period, across Latin America and the Caribbean there has been an increase in the access and usage of financial products and services. The pandemic has led millions of people to be integrated in the financial system for the first time either by opening an account or by using digital and e-commerce platforms. In Argentina, public banks registered 2.5 million new savings accounts since the beginning of the quarantine, a figure five times greater than all the accounts opened during 2019. In Costa Rica, a country of five million inhabitants, 900,000 new bank accounts were opened, and in El Salvador, electronic transfers and interbank transactions increased 55% and 245%, respectively, compared to the year before.

This is how it should be and it represents a very important evolution that will allow governments to mobilize a greater amount of resources for the economic development of their countries. However, this also imposes great challenges, where an accelerated digitalization and banking penetration without an adequate and modern regulatory structure could slow down the integration of institutions and individuals into the financial system especially among the vulnerable segment mainly women, migrants, forcibly displaced persons, youth, elderly people and MSME. I believe the growth of digitalization and challenges faced in the LAC region are also being experienced by members all around the world.

In this sense, it is important that financial authorities design measures to mitigate the impact on these vulnerable groups and increase resilience to crises such as the one we are currently experiencing. It is essential to strengthen the regulatory framework for consumer protection particularly redress mechanisms, improve cybersecurity and biometric identification measures, as well as design and implement financial education programs to prevent problems such as identity theft, fraud, illicit financial flows and money laundering.

Despite the challenges faced in 2020, a total of 141 new policy improvements have been reported by AFI members, which were informed by engagement in AFI. Of the new policy changes reported in 2020, 34 policy improvements were around DFS, focusing specifically on FinTech, E-money and National Payment Systems reviews.  Four new policy improvements reported in 2020 were related specifically to Gender Inclusive Finance.

Moreover, in line with AFI’s Phase III Strategy (2019-2023 Strategic Theme: Policy Leadership Alliance), 2020 has seen the endorsement of two Policy Models on National Financial Inclusion Strategy and Consumer Protection for Digital Financial Services, developed with the tremendous support of the Working Groups.  AFI Policy Models act as key frameworks and best practice examples to aid members as they develop own country policy while fostering international collaboration and raising members voice. The models reinforce the public policy objective of financial inclusion and financial stability. 

AFI also successfully delivered 18 Capacity Building (CB) events in 2020, attended by 1,309 policymakers across the global network. AFI knowledge products and policy learnings have been used as the anchor for CB events such as Joint Learning Programs and member training. AFI achieved a new milestone where female participation rate in these events surpassed 50 percent. Of the total participation, 53 percent are female, and 47 percent are male.

I wish to take this opportunity to share that the AFI Board of Directors at its last meeting on 17 December 2020, requested the AFI Management Unit (MU) to express their commendation and appreciation to the Working Groups on the outstanding leadership shown by the Working Group Chairs and Co-Chairs in successfully ensuring the completion of the Working Groups deliverables for the year 2020.

Specifically it is worth to note that in 2020, CEMC developed the Policy Model on Consumer Protection for DFS (CP4DFS) in response to the fast-paced growth of digital financial services and the accompanying risks to consumer protection, this document addresses the need of regulators to create and adapt consumer protection regulations and interventions that reflect the deepening role of digital financial services.

GSP on the other hand developed the Inclusive Financial Integrity Toolkit. The Toolkit guides members to align the goals of financial integrity and financial inclusion, assisting members with practical guidance and examples to ensure that the FATF standards can be successfully implemented without giving rise to unintended consequences for financial inclusion. A robust regime for anti-money laundering and countering terrorist financing should not come at the expense of access to the financial system, particularly for women and other disadvantaged groups. The toolkit has been presented to the FATF and in other setting such as the Global Forum on Illicit Finance, and has been utilized in AFI’s in-country implementation initiatives with members. Later this year, an e-learning course based on the toolkit will also be released as part of AFI’s capacity-building programs.

I commend all members of CEMC and GSP working groups who participated in the development of these valuable knowledge products. I wish to again acknowledge that all of the positive results and achievements in 2020 were due to all your commitments and determination. As we begin our journey in 2021, we must continue to remain focused in crafting the right policy intervention and aligning our perspective as the reality is still that 1.7 billion people are financially excluded and we still have a gender gap on access to financial services.  

I wish to end by thanking you for your participation and thanking the President and team at the Central Bank of El Savador and my colleagues at AFI for organizing this joint working group meeting. I wish you all fruitful deliberations. Thank you.


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