MICROCAPITAL BRIEF: G20’s Financial Inclusion Experts Group (FIEG) Releases Nine “Principles for Innovative Financial Inclusion” at Leadership Summit in Toronto, Canada

The Financial Inclusion Experts Group (FIEG), a division of the G20 – a group of twenty finance ministers and central bank governors that discuss key issues in the global economy – released nine “Principles for Innovative Financial Inclusion” at the recent G20 leadership summit in Toronto. The principles are intended to form the basis of a concrete action plan for improving access to financial services for the poor, which will be released at the Seoul Summit in November.

The nine principles are:

“1. Leadership: Cultivate a broad-based government commitment to financial inclusion to help alleviate poverty.
2. Diversity: Implement policy approaches that promote competition and provide market-based incentives for delivery of sustainable financial access and usage of a broad range of affordable services (savings, credit, payments and transfers, insurance) as well as a diversity of service providers.
3. Innovation: Promote technological and institutional innovation as a means to expand financial system access and usage, including by addressing infrastructure weaknesses
4. Protection: Encourage a comprehensive approach to consumer protection that recognizes the roles of government, providers and consumers.
5. Empowerment: Develop financial literacy and financial capability.
6. Cooperation: Create an institutional environment with clear lines of accountability and co-ordination within government; and also encourage partnerships and direct consultation across government, business and other stakeholders.
7. Knowledge: Utilize improved data to make evidence based policy, measure progress, and consider an incremental “test and learn” approach acceptable to both regulator and service provider.
8. Proportionality: Build a policy and regulatory framework that is proportionate with 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.
9. Framework: Consider the following in the regulatory framework, reflecting international standards, national circumstances and support for a competitive landscape: an appropriate, flexible, risk-based Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime; conditions for the use of agents as a customer interface; a clear regulatory regime for electronically stored value; and market-based incentives to achieve the long-term goal of broad interoperability and interconnection.”

By Conner Brannen, Research Assistant

About the G20:

Established in 1999, the Group of Twenty (G20) finance ministers and central bank governors brings together “systematically important” industrialized and developing economies to discuss key issues in the global economy. The G20 is made up of finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the UK and the US. The European Union is the twentieth member of the G20.

About the Financial Inclusion Experts Group (FIEG):

The Financial Inclusion Experts Group (FIEG) was created at the G20 Leaders Summit in Pittsburgh in September of 2009. The objective of FIEG is “to support the safe and sound spread of new modes of financial service delivery capable of reaching the poor and, building on the example of microfinance, will scale up the successful models of small and medium-sized enterprise financing.” FIEG’s agenda is divided into two sub-groups: Access through Innovation (ATISG) and small and medium-sized enterprise (SME) finance.

Sources and Additional Resources:

CGAP: “G20 Identifies nine principles for innovative financial inclusion, action plan expected in November,” June 28, 2010: http://www.cgap.org/p/site/c/template.rc/1.26.13722/

MICROCAPITAL BRIEF: G20 Releases Communique on Fighting Poverty, Will Establish Financial Inclusion Experts Group to Include CGAP, IFC, October 5, 2009: https://www.microcapital.org/press-release-g20-releases-communique-on-fighting-poverty-will-establish-financial-inclusion-experts-group-to-include-cgap-ifc/

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