Efforts in developing and emerging economies to promote financial inclusion for the world’s 2.5 billion unbanked population offer lessons to their developed world peers

At a time when central bankers in developed countries have been focused on traditional areas such as financial stability, their colleagues from the developing and emerging world have been playing a much wider role in their respective economies. In recent years, this group of central bankers has developed their mandates in innovative ways to promote more inclusive and sustainable growth by bringing the promise of financial inclusion to the world’s 2.5 billion unbanked population. Financial inclusion is recognized by most experts as a key determinant of sustainable, inclusive economic growth – indeed, the leaders of the Group of 20 (G-20) defined it as a core priority of development at the September 2013 St Petersburg meeting. Many central banks in developing economies share this vision and have already pioneered the adoption of methods to support new technologies, increase financial literacy and boost financial inclusion.

In an approach that may provide valuable lessons for the rest of the world, central bankers in the emerging and developing world have established a roadmap to create an innovative and enabling environment for financial inclusion through cooperation and shared experiences. This has resulted in consensus around a regulatory approach that supports a number of methods for tackling exclusion (microfinance, agency banking, etc), is flexible enough to cope with different country contexts, and enables each country to determine its own targets and pace of reforms. As a result, developing and emerging countries are not just playing an increasingly prominent role in the global economy; they are reshaping the approach of central banking.

The success of this new approach has been obvious and central bankers, policy-makers and development partners from around the world are starting to take notice. The evolution in the role of central bankers from pure monetary policy and focus on financial stability to a greater role in propelling and sustaining inclusive economic growth is being driven by several trends.

This is a portion of an article that originally appeared in Central Banking Journal. To access the entire article, please click here (subscription required).

ABOUT THE AUTHOR

Alfred Hannig heads the Alliance for Financial Inclusion (AFI) management unit in Bangkok which implements activities and provides services for members. His responsibilities also include taking an avid role in representing AFI to various stakeholders, and serving as a member of the Steering Committee.