BSP urges harmonization of rules on financial inclusion
MACTAN, Cebu – The Bangko Sentral ng Pilipinas (BSP) has urged central banks in the region to harmonize regulations, address regulatory gaps, and level the playing field for financial inclusion.
In his opening address during the BSP- Bank for International Settlements (BIS) Conference on Financial Inclusion, BSP Governor Amando Tetangco Jr. said the changes that increased financial inclusion call for greater coordination among regulators.
“Coordination could positively help harmonize regulations, address regulatory gaps and level the playing field,” Tetangco said.
“The framework and principles could then be the bases for closer dialogue among stakeholders, including central banks, other regulators, the standard setting bodies and the private sector,” he added.
The BSP and BIS co-hosted a research conference in Cebu over the weekend to discuss cutting-edge issues on financial inclusion and their impact on central banking.
“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.
Under the theme “Financial Inclusion and Central Banks”, the conference brought together financial regulators from Asia and leading global experts.
Tetangco said technological innovation has the potential to reduce costs and accelerate the on-boarding of currently excluded markets into the formal financial system.
In addition, technology solutions promise to enhance regulatory capacity and tools to supervise the market, and facilitate regulatory compliance and reporting of financial institutions.
These include big data analytics and algorithms, crowdfunding platforms, digital currencies, and RegTech or using technology to enhance regulatory capacity and enable regulators to analyze data to ensure timely supervision and intervention.
Tetangco said traditional players such as banks interconnect and engage new players such as financial technology companies that are often not within central bank supervision.
“There is a greater need to look at the entire chain of financial services being offered. The challenge for central banks and regulators here is to stay abreast with emerging business models and innovation, to understand the inherent risks of these new models, and to know how to proportionately manage the risks,” Tetangco said.
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.
The conference was then meant to deepen the discussions so that financial inclusion can be effectively and appropriately mainstreamed in the work of central banks.
While the Philippines is enjoying early gains from its initiatives in microfinance and mobile financial services, access to financial products and services remains a challenge as 36.4 percent of municipalities remain unbanked.
While 43.2 percent of Filipino saves, Tetangco said majority or 68.3 percent of them put savings at home. On the other hand, 72 percent of the 47.1 percent of Filipinos that have loans sourced their borrowings from family, friends and informal lenders.
Eli Remolona, chief representative for Asia and the Pacific at BIS, said the conference “barely scratched” the surface.
“Uncovering the evidence of what works and what does not work. We need to translate that evidence into policy,” he added.