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Unformatted text preview: Irving Fisher Committee on Central Bank Statistics IFC Bulletin No 47 The role of data in supporting financial inclusion policy Proceedings of the Bank of Morocco – CEMLA – IFC Satellite Seminar at the 61st ISI World Statistics Congress in Marrakech, Morocco, on 14 July 2017 May 2018 Contributions in this volume were prepared for the Bank of Morocco – CEMLA – IFC Satellite Seminar at the 61st ISI World Statistics Congress on “Financial Inclusion” in Marrakech, Morocco, on 14 July 2017. The views expressed are those of the authors and do not necessarily reflect the views of the IFC, its members, the BIS and the institutions represented at the meeting. This publication is available on the BIS website ( ). © Bank for International Settlements 2018. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. ISSN 1991-7511 (online) ISBN 978-92-9259-166-3 (online) The role of data in supporting financial inclusion policy IFC Bulletin No 47 May 2018 Proceedings of the Bank of Morocco – CEMLA – IFC Satellite Seminar at the 61st ISI World Statistics Congress Marrakech, Morocco, 14 July 2017 Seminar overview The role of data in supporting financial inclusion policy Payment Systems and Means Oversight and Financial Inclusion Department’s team, Bank of Morocco Jose Maria Serena Garralda and Bruno Tissot, Bank for International Settlements (BIS) Opening remarks Abdellatif Jouahri, Governor of Bank of Morocco Session 1 – Capturing local aspects of financial inclusion Assessing financial inclusion in Portugal from the central bank’s perspective João Cadete de Matos and Luís D’Aguiar, Bank of Portugal Financial inclusion: scope, organisation and results in France Jacques Fournier, Bank of France National financial inclusion strategies and measurement framework Zarina Abd Rahman, Central Bank of Malaysia International collaboration on assessing financial inclusion - Bank of Morocco’s monitoring and evaluation framework Asmaa Bennani and Ibtissam El Anzaoui, Bank of Morocco Session 2 – Compiling data on financial literacy Measuring financial competences in a large-scale survey: the Spanish Survey of Financial Competences Josep Amer, Olympia Bover, Laura Hospido and Ernesto Villanueva, Bank of Spain Measuring the financial literacy of the adult population: the experience of the Bank of Italy Antonietta di Salvatore, Francesco Franceschi, Andrea Neri and Francesca Zanichelli, Bank of Italy IFC Bulletin No 47 iii Financial citizenship statistics production Katherine Hennings and Danniel Lafetá Machado, Central Bank of Brazil What is financial inclusion and how to stimulate this in the Netherlands? Michiel van Doeveren, Netherlands Bank Session 3 – Closing data gaps in an evolving environment The Chilean experience of a universal access debit card Erika Arraño and Juan Pablo Cova, Central Bank of Chile Moroccan micro, small and medium-sized enterprises observatory (MSMEO) Jilali Rahali, Moroccan Observatory of MSME Financial inclusion in Nigeria: the challenges of banks and mobile money operators (MMOs) Oluwaseun Odunayo Adesanya, SystemSpecs Limited The role of payment systems and services in financial inclusion – the Latin American and Caribbean perspective Raúl Morales Resendiz, Center for Latin American Monetary Studies (CEMLA) Adapting monetary policy to increasing financial inclusion James Yetman, BIS Session 4 – The need for cross-country harmonised time series Financial Access Survey (FAS): the IMF’s financial inclusion data Peter van Oudheusden, International Monetary Fund (IMF) The role of demand-side data – measuring financial inclusion from the perspective of users of financial services Leora Klapper and Dorothe Singer, World Bank Measuring financial inclusion: a multidimensional index Noelia Cámara, BBVA Research, and David Tuesta, CAF- Bank of Development for Latin America Measures of financial inclusion – a central bank perspective Bruno Tissot and Blaise Gadanecz, BIS iv IFC Bulletin No 47 The role of data in supporting financial inclusion policy Overview of the IFC Satellite Seminar1 Bank of Morocco, Payment Systems and Means Oversight and Financial Inclusion Department team, 2 Jose Maria Serena Garralda and Bruno Tissot 3 Introduction Financial inclusion: a worldwide policy priority The Great Financial Crisis (GFC) reflected a widespread lack of financial literacy across society. As financial illiteracy and the associated market abuses exacerbated the fragilities that emerged in the run-up to the GFC, policymakers have tightened their focus on strengthening financial literacy and consumer protection. Policymakers also sought to improve access to financial services for underprivileged or underserved groups. Two key objectives are to ensure credit access for small and medium-sized enterprises (SMEs) and to provide basic financial services to unbanked households. Meeting these objectives has created new data collection needs. 4 The rapid pace of financial innovation, in addition, has reinforced policymakers’ interest in financial inclusion. New digital payment systems (eg via smartphones), in particular, have improved access to financial services, especially in developing countries where take-up for “traditional” banking services has been lower. This has attracted significant attention among regulatory bodies and standard setters. 5 1 The views expressed here are those of the authors and do not necessarily reflect those of the Bank for International Settlements (BIS), the Bank of Morocco (BoM), the Center for Latin American Monetary Studies (CEMLA) or the Irving Fisher Committee on Central Bank Statistics (IFC). We thank Aurel Schubert, Katherine Hennings, and Stephan Müller for their comments and suggestions. 2 [email protected] 3 Respectively, Economist, BIS Monetary and Economic Department ([email protected]); and Head of Statistics and Research Support, BIS and Head of the IFC Secretariat ([email protected]). 4 For policy recommendations at an early stage see International Finance Corporation, “Towards universal access. Addressing the Global Challenge of Financial Inclusion”, 2010; and GPFI, “GPFI 2017 Progress Report”, 2017, for a summary of recent activities and a description of ongoing initiatives. 5 The BIS’s Financial Stability Institute (FSI) has hosted three Global Partnership for Financial Inclusion (GPFI) Conferences on Standard-Setting Bodies and Financial Inclusion. For an overview of the most recent discussions see GPFI, “Global Standard-Setting Bodies and Financial Inclusion: The Evolving Landscape”, GPFI White Paper, 2016, and also J Caruana, "New frontiers in the supervision and oversight of digital financial services", Basel, 26 October 2016; welcoming remarks at the Third GPFIFSI Conference on Standard-Setting Bodies and Innovative Financial Inclusion. IFC Bulletin 47 1 Large data needs Large and diverse information needs must be addressed if these issues are to be tackled. Detailed data are required ex ante to identify the appropriate policy measures, as are consistent time series to evaluate their effectiveness ex post. 6 Fortunately, a wide range of information sources already exists. For instance, data that can be used to assess the supply of financial services are widely available. More recently, a number of initiatives have started to complement this information with survey-based indicators (covering both households and firms), for instance, to assess financial literacy issues and the quality of users’ access to financial services. Nevertheless, significant efforts are still required to exploit the full opportunities provided by existing administrative data sources. Central banks have played a pivotal role in collecting financial inclusion statistics. At the global level, they have actively contributed to the G20 Financial Inclusion Action Plan (FIAP) that is pushing data collection initiatives in various areas – including digital financial services, SMEs finance, and financial literacy. 7 But the local data needed to cover financial inclusion issues can differ significantly across countries – depending, for instance, on their degree of financial deepening. Accordingly, many central banks have also taken steps to compile additional, domestic statistics to complement the global indicators; these can help to facilitate the centralisation of the various data sets that may already exist in a country. The workshop: enhanced data to support financial inclusion policy The experience of the Irving Fisher Committee on Central Bank Statistics (IFC) is that sharing national experiences can bring important benefits to the international statistical community. A major one is the identification of best practices – particularly useful when authorities are struggling to implement global initiatives locally. International discussions are also key to disseminating new techniques and raising awareness of related achievements and limitations. Focusing more specifically on financial inclusion, a key conclusion of previous IFC work is the importance of the role played by data. This is because of the broad aspects to be considered when dealing with financial inclusion issues (eg financial supervision, consumer protection, economic policy), and also because of the close interaction between measurement and policy actions in this area. 8 Central banks are in a unique position to promote the use of data for financial inclusion purposes, reflecting the extent and diversity of their mandates and policies in this area. Against this backdrop, the IFC, in cooperation with the Bank of Morocco (BoM) and the Center for Latin American Monetary Studies (CEMLA), organised a 6 For an overview of the related data aspects, see B Tissot, “Statistical challenges related to financial inclusion”, 2015; paper presented at the 60th congress of the International Statistical Institute in Rio, . 7 Many central banks take active part in the GPFI, which is carrying forward the FIAP; this strategy was first endorsed at the Seoul G20 Summit in 2010 -see G20, “The G20 Seoul Summit Leaders’ Declaration”, November 11-12 2010. As a result, many central banks have an active role in the Alliance for Financial Inclusion (AFI), the OECD International Network on Financial Education, the IMF Financial Access Survey, or the World Bank Global Findex Initiative. 8 For a summary of previous discussions, see IFC, “Financial inclusion indicators”, IFC Bulletin no 38, January 2015. 2 IFC Bulletin 47 workshop in July 2017 to discuss how statistics can be better used to support financial inclusion policy needs. Almost 100 participants convened, representing 34 central banks and several international financial organisations and other institutions. In his opening remarks, Abdellatif Jouahri, Governor of the BoM, emphasised that policies to promote financial inclusion need to be guided by data. To this end, three aspects were essential. First, international data collection initiatives are instrumental if one wants to use globally harmonised data sets. The World Bank Global Findex and the IMF Financial Access Survey (FAS) are good examples of such global initiatives designed to assess financial inclusion – from the supply and the demand side, respectively. Second, local authorities should conduct data collection exercises to measure aspects that are specifically relevant in their jurisdictions. For instance, the collection of high-quality data on very small, small, and medium-sized enterprises (VSMEs) is a key objective of the BoM in order to support enterprises’ access to finance. Since VSMEs play an important role in Morocco, the BoM has launched an initiative to centralise and analyse data on this particular segment. Third, local authorities and international institutions can usefully cooperate to improve the quality of the data collected on financial inclusion. For instance, the BoM has conducted, in cooperation with the World Bank, a survey to assess households’ perception of financial services. The BoM also interacts with the central banking community on those topics. Such cooperation efforts have been particularly useful for developing the National Financial Inclusion Strategy. Claudia Buch, Vice President of the Deutsche Bundesbank and Chair of the IFC, emphasised in her remarks that financial inclusion can promote economic prosperity and help strengthen economic opportunities. At the same time, it requires consumers and investors to acquire additional skills and abilities. Widespread access to financial markets and to a greater variety of products can increase the likelihood of uninformed financial decisions or fraud. A certain level of financial literacy is therefore required to properly manage risks. This is particularly important for young people, whose financial decisions can affect lifetime income and wealth. Thus, young cohorts have an important stake in current policy decisions on fiscal policy and pension reforms. From this perspective, effective financial education is important, not least to ensure informed financial decision-making. The challenge is that educational programmes have to be properly implemented in order to deliver the intended results. In particular, they need to take account of national educational systems. Successful approaches can vary between countries, given the differences in educational systems and other institutional features affecting financial literacy. In this context, the 2017 German G20 presidency contributed to the improved analysis, sharing and design of information on financial literacy programmes. 9 The meeting was organised in four parts covering various aspects of the role that data can play to support financial inclusion policy. The first part emphasised the importance of capturing local characteristics of financial inclusion when setting policies. The second part focused on the need to measure financial literacy, which has proved important when assessing financial resilience. The third part discussed how the evolution of financial markets can create new data gaps, and the efforts to address 9 Policymakers, researchers, and practitioners will benefit from the new data promoted by the OECD/International Network on Financial Education (INFE): see C Buch, “Financial literacy and financial inclusion: Priorities of the G20 German presidency” speech at the fourth OECD/GFLEC Global policy research symposium to advance financial literacy, 2017. IFC Bulletin 47 3 them. The last part dealt with the importance of the initiatives to construct globally harmonised, and historically comparable, data sets on financial inclusion. Key takeaways The discussions highlighted a number of key issues regarding the compilation of statistics for effective policy implementation to promote financial inclusion, with specific implications for central banks: 10 4 • Policymakers need harmonised cross-country data to design and evaluate financial inclusion policies. Several sets of statistics are already available, thanks in particular to the ambitious post-crisis international data collection initiatives. These statistics can help, for instance, in assessing the potential of digital innovation to provide services to financially excluded groups. • Time consistency is also key, not least to assess the effectiveness of financial inclusion policies. Global harmonisation can help from this perspective, by providing a stable framework for collecting data over time. • National authorities often need to launch additional data collection initiatives to capture aspects of local interest. For instance, advanced countries have a great interest in financial inclusion aspects related to economic fragilities (eg risk of excessive indebtedness). Similarly, countries that seek to promote access to financial services for certain population segments need specific data related to the groups being targeted. • Central banks play an important role in the production of financial inclusion data. They are in an almost unique position to exploit administrative data sets, especially on the financial system, thanks to the information reported by banks and other financial institutions. They can also complement such supply side statistics with other sources, leveraging their experience in conducting surveys and measuring financial literacy. • Data needs can rapidly change because financial markets are constantly evolving – witness the pace of innovation in digital payments and financial services (eg via smartphones). This can result in unexpected data needs, because of the limitations of “traditional” administrative sources of information (such as banking data) to capture these changes. Besides, innovation can lead to new ways of collecting data (eg big data techniques). 10 • Countries should focus on an integrated view of financial inclusion statistics. This is because they involve several policy areas, such as financial infrastructure provision or consumer protection. As a result, the data are often scattered across different institutions within a country. • Significant coordination is required to address these issues, although international experience is quite diverse. One way is to better formalise data cooperation between the various stakeholders; another is to clarify that one institution is in charge of centralising country information in the context of a clearly defined financial inclusion strategy. In any case, central banks can, See IFC, “Big data”, IFC Bulletin, no 44, September 2017. IFC Bulletin 47 and have indeed done so already in many places, play a useful role in fostering such a coordinated approach. 2. Capturing local aspects of financial inclusion The first session, chaired by Aurel Schubert, IFC Vice-Chair and European Central Bank, emphasised that financial inclusion data collection has both a global dimension and also important domestic aspects. First, local policy priorities might differ significantly across countries. Domestic specificities should be carefully considered to ensure time series are compiled consistently, a prerequisite for effective policy evaluation. 11 Furthermore, there is a need for adequate local frameworks for cooperation and data-sharing especially in countries where data on the use of financial services are dispersed among several authorities. These issues were highlighted in the first presentation, by the Bank of Portugal (BoP), which stressed the importance of enhancing granular information on borrower quality. In particular, a key policy objective is to identify the types of borrower that run a risk of losing access to formal financial services, noting that these groups may differ across jurisdictions. The Central Credit Register (CCR) set up by the BoP is an important source of information in this respect. Its data on credit liabilities on a loan-by-loan basis can be used by financial institutions to assess borrower risk profiles. The Bank of France also underlined the importance of capturing countryspecific data on households’ financial fragilities as a way to support the provision of basic financial services to them. Monitoring these fragilities is a policy priority in many advanced economies, where access to financial services is relatively widespread but can be suddenly interrupted for certain groups of households. In France, the Banking Inclusion Committee, a tripartite council chaired by the central bank’s Governor, is coordinating a national strategy to address this issue and facilitate the continuous provision of basic financial services (eg specific bank accounts with reduced fees and minimal services; microcredit facilities; and answers to questions about financial issues) to financially fragile households. This requires the collection of data with many local characteristics. This was echoed in the presentation from the Central Bank of Malaysia (CBM), which stressed the need for consistent time series data to evaluate financial inclusion policies. This is particularly import...
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