‘Do not over­look risks to fi­nan­cial in­clu­sion’

Business Mirror - - BANKING&FINANCE - By Bianca Cuaresma @Bcuares­maBM

WHILE fi­nan­cial reg­u­la­tors and in­sti­tu­tions all clamor to achieve a higher level of fi­nan­cial in­clu­sion in the coun­try, the Bangko Sen­tral ng Pilipinas (BSP), along with the Bank for In­ter­na­tional Set­tle­ments (BIS), said nec­es­sary mea­sures should not be rushed to max­i­mize the ben­e­fits of fi­nan­cial ac­cess to all.

In its maiden re­search con­fer­ence in Cebu, the cen­tral bank and the BIS dis­cussed is­sues on fi­nan­cial in­clu­sion and their im­pact on cen­tral bank­ing.

The con­fer­ence was an ini­tia­tive of BSP Gover­nor Amando M. Te­tangco Jr. in his ca­pac­ity as chair­man of the Asian Con­sul­ta­tive Coun­cil (ACC).

“There has been con­sid­er­able fo­cus on fi­nan­cial in­clu­sion in sev­eral fo­rums but we could ben­e­fit from a fo­cused dis­cus­sion on its link­ages with fi­nan­cial sta­bil­ity and other key is­sues,” Te­tangco said.

Te­tangco said in a me­dia brief­ing that fi­nan­cial reg­u­la­tors must have the ca­pac­ity to keep up with the rapid rise of fi­nan­cial in­clu­sion in re­spec­tive ju­ris­dic­tions, as broader fi­nan­cial ac­cess causes shifts in mar­ket be­hav­ior.

“Never over­look the risk as­pects of finance,” Te­tangco said.

In par­tic­u­lar, the gover­nor cited the need for greater co­op­er­a­tion among reg­u­la­tors to es­tab­lish a stronger pay­ments sys­tem in the coun­try.

The gover­nor also said fi­nan­cial lit­er­acy and am­ple vig­i­lance in safe­guard­ing the sys­tem must be in place to en­sure ef­fi­cient ser­vices to those who have ac­cess to fi­nan­cial plat­forms in the coun­try.

Fi­nan­cial in­clu­sion has gained promi­nence as a global pol­icy agenda, as it com­ple­ments other pol­icy ini­tia­tives on re­duc­ing poverty, ad­dress­ing in­equal­ity, and pro­mot­ing fi­nan­cial sta­bil­ity and in­tegrity.

“This is a very im­por­tant area for the Philip­pines. While the Philip­pines is en­joy­ing early gains from its ini­tia­tives in mi­cro- finance and mo­bile fi­nan­cial ser­vices, ac­cess to fi­nan­cial prod­ucts and ser­vices re­mains a challenge,” the cen­tral bank said.

Lat­est data from the BSP show 36.4 per­cent of the coun­try’s mu­nic­i­pal­i­ties re­main un­banked; and, while 43.2 per­cent of Filipinos save, 68.3 per­cent of them put sav­ings at home.

Also, while 47.1 per­cent of Filipinos have loans, 72 per­cent of those who bor­row money get it from in­for­mal sources, like fam­ily and friends.

The same challenge is be­ing faced by small and medium en­ter­prises (SMEs), where only 30.5 per­cent of them have a credit line from a bank.

“In­creas­ing ac­cess and ef­fec­tive us­age of fi­nan­cial prod­ucts and ser­vices en­sure that in­di­vid­u­als, house­holds and firms can be pro­duc­tive eco­nomic agents to­ward in­clu­sive growth,” the cen­tral bank said.

Just re­cently, the BSP led the craft­ing of the Na­tional Strat­egy for Fi­nan­cial In­clu­sion, to­gether with 12 other gov­ern­ment agen­cies to co­or­di­nate fi­nan­cial in­clu­sion ef­forts in the coun­try.

72% The per­cent­age of Filipinos who bor­row money from in­for­mal sources, such as fam­ily and friends

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