The CAREC Institute Director Syed Shakeel Shah was invited to present at a panel session on financial inclusion organized by the CAREC Secretariat during Astana Finance Days on 1 July 2021.
Senior officials from relevant ministries, central banks, and regulatory authorities in the CAREC region and experts from ADB, IMF, World Bank, and other development partners shared their insights and experiences in dealing with financial inclusion challenges posed by the pandemic, discussed innovation as a driver of financial inclusion, and emphasized the role of regional cooperation.
The Governor of the Central Bank of Pakistan mentioned that the national financial inclusion strategy was adopted in 2015 and this created an enabling framework for introduction of innovative products.
The representative of Uzbekistan Central Bank discussed the digital literacy program implemented in partnership with the World Bank, and the distance access program for remote identification of IDs, implemented together with EBRD. Besides, details were provided of the July 2019 presidential decree which simplified procedures for issuance of permits for entrepreneurs, also procedures for loans. The new law on payments and payment systems (which currently recognizes five systems) was also discussed. Numbers were shared regarding the credit cards and ATM in the country.
Governor Gvenetadze of the National Bank of Georgia provided an example of an innovation office which is set up in the Bank and which serves as a communication platform to help enterprises with legally acceptable business models. There is also a regulation laboratory in Georgia which allows regulatory entities to test new ideas. He noted that easier entry requirements are needed to increase digital financial services, and fintech-friendly business models need to be elaborated. Governor Gvenetadze further shared that the country is working on the open banking framework, and that financial education and consumer protection remain a priority. He also elaborated how responsible lending policies were adopted in Georgia in response to non-performing loans.
The IMF’s Jihad Azour touched on the issues of uneven pace of economic recovery, fragilities, economic scarring, and noted importance of work at three levels: macro-stability level, opportunity creation, and the institutional level.
The World Bank representative noted that international financial institutions (IFIs) are most relevant when they act as trusted advisors to the governments. He elaborated on three fundamental problems: 1) when there is limited fiscal space for targeted policy support (on average, only 1 in 4 firms might be beneficiaries), 2) how to exit these extraordinary measures where too soon might be procyclical but too late might distort prices, also how to manage potential non-performing loans where early action is important, and 3) how to manage tensions surrounding technologies where only about 1/3 of businesses were able to adopt technologies in response to COVID-19; and how to address the issue of a large concentration of market power.
The CAREC Institute Director Shah shared information from the financial inclusion working paper by the Institute and the conference paper on promoting fintech to meet underserved needs in trade finance in the CAREC region presented at the CAREC Institute research conference in March 2021. He concluded that creating the enabling regulatory environment, investing in digital infrastructure, awareness raising, and building trust are the necessary policy measures in the given context.