About
Online
Data
 |
Global Standards Proportionality
|
The adoption of appropriate global standards for financial stability and integrity is of great importance to ensure that financial inclusion is pursued in tandem with safe and sound financial systems.
Standard-setting bodies recognize that the implementation of global standards should be proportionate, risk-based and without unintended consequences for the promotion of financial inclusion. Nonetheless, achieving proportionality at the national level can be challenging for a variety of reasons. These include:
• capacity challenges in effective implementation of a risk based approach;
• inter-agency coordination and data challenges; and
• insufficient tools to monitor the impact of standards on sectors which may have important roles in financial inclusion.
The Financial Stability Board (FSB) acts as a coordinating body of SSBs with respect to financial stability. In addition, six SSBs engage in work relevant to financial inclusion: The Basel Committee for Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), the Financial Action Task Force (FATF), the International Association of Deposit Insurers (IADI), the International Association of Insurance Supervisors (IAIS), and the International Organization of Securities Commissions (IOSCO).
In 2010, the G20 Principles for Innovative Financial Inclusion were developed with the aim of creating an enabling policy and regulatory environment for innovative financial inclusion. The eighth principle, which relates to ‘Proportionality’, calls for the building of a policy and regulatory framework that is proportionate to the risks and benefits involved in such innovative products and services, and is based on an understanding of the gaps and barriers in existing regulation.
In July 2014, the members of the Alliance for Financial Inclusion (AFI) created the Global Standards Proportionality (GSP) Working Group. This serves as a platform to facilitate peer learning among policymakers and regulators in achieving a balance between financial inclusion, integrity and stability, as well as to examine the proportionate implementation of standards set by global Standard-Setting Bodies (SSBs).
In May 2015, the Global Symposium “Towards Proportionality in Practice: Financial Inclusion and Implementation of Global Standards” was held in Kuala Lumpur, co-hosted by Bank Negara Malaysia, the Toronto Centre, and AFI. The adopted KL Resolution of Proportionality in Practice, calls for the gathering of data and evidence on the impact on implementing global financial stability standards in developing countries, highlighting the costs of unintended consequences and the benefits of proportionate approaches. It also calls for the documentation of successful regulatory and supervisory approaches to implementing proportionality, and the continuation of peer learning for successful approaches to implementing proportionality globally.
Within the global standards proportionality (GSP) thematic area, AFI members have pioneered and implemented a number of approaches to achieve effective policy approaches which balance financial inclusion, stability and integrity considerations. They are also advancing peer learning and capacity building with respect to the opportunities and risks presented by innovative technologies, mitigating the impact of global bank ‘de-risking’ on affected jurisdictions and ensuring that global standards are implemented with consideration for the financial inclusion of disadvantaged groups, including women, youth, forcibly displaced persons and populations living in rural areas.
While financial integrity and stability are the key mandates of financial regulators globally, financial inclusion plays a key role in crisis mitigation, economic recovery and resilience building. The implementation of global standards for financial integrity and stability may have unintended adverse consequences on financial inclusion of women and other disadvantaged groups. For instance, women are less likely to hold the requisite documents for customer identification.
In addition, most women may not have access to collateral that is sufficient to secure a loan. It is therefore crucial that global standards are implemented proportionately while considering the inherent risks and being attentive to gender considerations.
GSP, as a thematic area, covers a total of 18 Maya Declaration targets, including those related to the proportionate implementation of both financial integrity and financial stability standards.
| Primary thematic area | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
Global standards proportionality
|
Maya Declaration targets | 3 | 3 | 5 | 5 | 6 | 8 | 10 | 18 | 18 | 27 |
| Completed | 1 | 1 | 1 | 1 | 1 | 3 | 3 | 4 | 4 | 10 | |
| In progress | 2 | 2 | 4 | 4 | 5 | 5 | 7 | 14 | 13 | 17 | |
| Completion rate | 33% | 33% | 20% | 20% | 17% | 38% | 30% | 22% | 22% | 37.04% | |
AFI’s Global Standards Proportionality Working Group (GSPWG)
GSPWG is a platform that provides technical support to developing and emerging country policymakers to implement global standards for financial stability (e.g. the Basel Framework) and financial integrity (e.g. Financial Action Task Force [FATF] 40 Recommendations) proportionately and without unintended negative consequences for financial inclusion.
The working group supports AFI’s Global Standards and Policy Committee with respect to strategic engagements with global standard-setting bodies and leverages on AFI’s partnership with the FATF-Style Regional Bodies and the International Association of Deposit Insurers.
Members also exchange information on the opportunities and risks associated with new technologies, such as digital identity innovations, regulatory technology solutions, and the growing use of virtual assets, which could potentially impact the effectiveness of global standards and regulatory compliance.
The working group has four thematic subgroups and one taskforce:
•Digital Identity and E-KYC
•Virtual Assets Regulation
•Stress Testing & Crisis Resolution for E-Money Providers
•Climate Change, Sustainable Finance, and Financial Stability
•RegTech Taskforce (Jointly with DFSWG and FIDWG)
Chair
Joseph Munyoro, Bank of Zambia
Co-Chair I
Phepile Dlamini, Central Bank of Eswatini
Co-Chair II
Manuel Rodriguez, Superintendencia de Bancos de la República Dominicana
Gender Focal Point Primary
Mariama Sillah, Bank of Gambia
Inclusive Financial Integrity
Objective: To develop an M&E framework to monitor progress and challenges in implementing Inclusive Financial Integrity across the AFI network.
Deliverable: M&E framework for Inclusive Financial Integrity
Inclusive Financial Stability
Objective: To support members in aligning the goals of financial stability and financial inclusion, with practical guidance on the incorporation of proportionality, financial inclusion considerations, and climate risk considerations into financial stability frameworks and policies.
Deliverable: Inclusive Financial Stability Toolkit
Virtual Assets Policy/VASP & Regulation
Objective: To support the AFI network with policy guidance and approaches to:
(1) financial inclusion use cases for VAs and VASPs particularly from experiences and proven pilots led in the private and humanitarian sectors whereby there have been concrete instances or evidence of the advancement of financial inclusion; and
(2) policy and regulatory approaches to VAs and VASPs, including how the balance between financial inclusion, financial integrity, financial stability and consumer protection can be achieved.
Deliverable: Guideline on Regulation of Virtual Assets
Financial Inclusion Country Assessment
Objective: To assist members impartially self-evaluate their current state of progress in advancing financial inclusion in their jurisdiction and receive review inputs from peers from within the network, as well as identify forward priorities and policy recommendations to support members’ financial inclusion strategies.
Deliverable: AFI’s 2024 Pilot Financial Inclusion Country Assessment
2022
2021
2020
2018
2016
2013
2011
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Events | FINTWG 1st: Bali, Indonesia |
2nd: Lima, Peru 3rd: Riviera Maya, Mexico |
54th: Lilongwe, Malawi 5th: Cape Town, South Africa |
6th: Kuala Lumpur, Malaysia | 7th: Frankfurt, Germany GSPWG 1st: Port of Spain, Trinidad % Tobago |
2nd: Kuala Lumpur, Malaysia 3rd: Maputo, Mozambique |
4th: Moscow, Russia 5th: Nadi, Fiji |
6th: Accra, Ghana 7th: Sharm El Sheikh, Egypt |
8th: Siem Reap, Cambodia 9th: Sochi, Russia |
10th: Cairo, Egypt 11th: Kigali, Rwanda |
12th: Virtual Meeting | 13th: Virtual Meeting 14th: Virtual Meeting |
| Member Institutions | N/A | N/A | 18 | 20 | 32 | 38 | 47 | 45 | 44 | 48 | 53 | 53 |
| Knowledge Products (aggregate) |
0 | 5 | 5 | 6 | 6 | 6 | 7 | 7 | 11 | 11 | 12 | 19 |
| Policy Changes (aggregate) |
0 | 0 | 1 | 2 | 14 | 15 | 15 | 26 | 28 | 42 | 57 | TBD |
| Peer Reviews (aggregate) |
0 | 0 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | TBD |
Inclusive Financial Integrity: a Toolkit For Policymakers
- Read MoreAFI’s Global Standards Proportionality Working Group (GSPWG) webinar on Virtual Assets Regulation: Aligning Inclusion and Integrity Goals explored the Financial Action Task Force (FATF) standards and guidance on AML-CFT risks in the virtual assets sector, steps to take within the sector to mitigate risks and enhance compliance. The webinar covered also regulatory approaches by AFI members to meet FATF expectations and safeguard financial integrity without undue hindrance to innovation or inclusion.
- Read MorePolicymakers in AFI network and globally have identified the economic and financial losses brought about by climate change as a significant threat to financial stability as its socioeconomic impacts have the potential to reverse years of gains in financial inclusion in developing countries.
AFI’s Global Standards Proportionality Working Group (GSPWG) and Inclusive Green Finance Working Group (IGFWG) Webinar explored topics on the linkages between financial stability, climate change, and inclusive green finance policies, as well the opportunities that exist for member institutions to contribute to relevant standard-setting and international processes.
© Alliance for Financial Inclusion 2009-2024