Central Banks Focus on the Unbanked

February 26, 2010

Central banks have made a commitment to support each other in building more inclusive financial systems. This was agreed during a two day meeting of senior representatives of central banks from Vanuatu, Papua New Guinea, Solomon Islands, Samoa and Fiji facilitated by the Pacific Financial Inclusion Programme (PFIP) and Alliance of Financial Inclusion (AFI).

The goal of financial inclusion is to extend access of financial services to rural and low-income communities. In the Pacific an estimated 70% of the population lack access to basic financial services such as financial literacy training, savings accounts or money transfer. Participants recognized that basic financial services and training are critically important to reducing poverty.

Establishing an inclusive financial system requires public, private and non-profit participation and central banks can play a key role in creating the right regulatory and policy environment. The agreement of the central banks to work together in several areas included a review of how know your customer and financial transactions reporting requirements might inhibit people without paper identification from opening savings accounts. Other issues considered were how agents might act on behalf of banks to extend banking services, particularly deposit services, outside of the cities and large towns as well as what action is needed to enable mobile phones to be used to provide basic financial services.

AFI is a network of policymakers from 80 developing countries that provides resources for its members to share their knowledge of policies that work for financial inclusion. AFI will support the exchange of knowledge with other countries, such as Kenya, Brazil and Philippines, that are more advanced in agent banking and mobile phone-based financial services.

The Pacific Financial Inclusion Programme will further support the group as well as other key stakeholders in enhancing financial inclusion. PFIP is funded by the United Nations Capital Development Fund, AusAID, the European Union, and the United Nations Development Programme (UNDP) and operates from the UNDP Pacific Centre in Suva, Fiji.

Alliance for Financial Inclusion www.afi-global.org