WSBI outlines savings and retail banks' role to address it
>> See WSBI's G20 Institutional Positions Paper
>> Link: Argentina G20 presidency
BRUSSELS, 30 November 2018
Statement of WSBI-ESBG related to the G20 Leaders Summit starting today.
The two-day G20 Leaders' Summit starting today highlights the pressing need to narrow the socio-economic inequality gap among people around the globe. Savings and locally focused retail banks are committed to help.
That means 104 members of WSBI that serve more than 1.2 billion people on all continents will go even further to ratchet up the number of people who can access – and benefit from – the formal economy and the financial system.
So far, savings and retail banks operating in some 80 countries have a strong track record playing its role in fair and sustainable development. Why? Because when people and their communities have sound and solid financial footing at local level, they better withstand the headwinds of globalisation. To do this, local focused savings and retail banks have close and trusting relationships with their customers through a proximity-based business model. Oftentimes eschewed by big, bespoke international banks, this community-oriented model better serves people on the ground and the overall financial landscape. The financial crisis has shown this. A diverse banking sector at the time built up banking market resilience while conglomerates in 2008 raised the risk of market meltdown. It gave further evidence that pluralistic banking structures, with multiple banking models, reinforce financial system stability, sustainability and competitiveness.
To ensure a diverse banking future, the right regulatory framework can help. That means adapted regulation applied to banking sector rulemaking to help unleash growth and develop further businesses, households and other engines of regional economic activity. To do this, there is need for policy to weave in the proportionality principle into better regulation. This tier-based approach takes into account the unique nature of locally focused banks. By applying the principle, policymakers acknowledge the role banks play in fostering investment and the capability of banks to fund investment. Locally focused banks should not be hit by the regulatory framework such as rules on capital requirements and liquidity.
By taking an adapted approach, the pay-off is clear: sources of local investment open up and there is continued engagement by locally rooted retail banks to finance economic development projects on the ground. When that occurs, WSBI banks meet their commitment to bring a return to society while remaining a profitable business.
The G20 is arguably the top forum to address issues relating to global economic growth and financial market regulation. To help in that process, WSBI provides G20 leaders its institutional position paper. WSBI also presents its recently released declaration titled "Bringing the benefits of globalisation to all". Both documents demonstrate that WSBI members – numbering 6,000 institutions – value proximity banking, offering services to people, micro-enterprises, SMEs and local authorities with €15 trillion in assets in G20 countries. Their business model plays a much-needed role for markets' sustainable development.