Building consensus for fair, sustainable development
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WSBI released today the following declaration addressing policy themes outlined by the G20 Argentina presidency. The declaration is based on the document titled 'WSBI Institutional position towards G20 decision-makers' also published today.
Economic research shows the benefits of globalized trade relations. However, globalization also increases economic and social inequality, since some people are more skilled and have access to better resources and infrastructure than others have. The digital revolution further exacerbates this inequality. Individuals, organizations or companies without the required mindset; the necessary skills or the indispensable financial and logistical resources are at risk to be left behind.
An inclusive, fair and sustainable financial system that offers all households and companies appropriate access to financial services is a key element for the stability of the financial system and the global economy. Locally focused financial institutions such as the WSBI members can help bring a maximum of people in the financial system. Indeed, WSBI members are close to their customers and have a long-term perspective. They are ideally placed to help people better navigate their financial future in an inter-connected world.
In order for locally focused banks to cater to their clients' needs in an efficient way, banking regulation should take into account the principle of proportionality. Efficient regulation needs to consider a bank's business model, size and risk profile. Currently, local banks in particular are hampered by one-size-fits-all-regulation.
A much-needed framework for digitalized finance needs to create the right environment for innovation in the financial sector and protect both companies –incumbents as well as newcomers - and customers. Regulators need to act on data protection, e-identity, and cyber security, among others.
The role of banks in fostering investment should be well recognized. The capability of banks to fund investment should not be impacted by the regulatory framework such as the rules on capital requirements and liquidity. These rules increase significantly minimum capital requirements for banking institutions, especially for smaller banks. WSBI encourages regulators to design policies that could boost bank lending for infrastructure projects and that involve SMEs. In the developed and the developing world alike, SMEs are able to rapidly transmit innovative solutions to the global economy.
In order to remain competitive, SMEs absolutely need to have unrestrained access to traditional bank financing. Bank financing is not only the most accessible source of capital, but it guarantees the SME also the competent advice of the financial adviser, especially in the case of local banks. Indeed, local banks, such as the WSBI members, are able to achieve an effective and granular distribution of risks in an internationally connected economy.
Excessive regulation restricts the ability of banks to supply the real economy with credit.
Policy support is required to advance financial inclusion commitments from all stakeholders involved. The goals must be to achieve a stable, sustainable financial system, which offers appropriate access to financial services for all households and businesses. This is the key to sustainable, worldwide economic growth, which develops from the bottom up and in which everyone can participate.
In this context, WSBI points to the far-reaching consequences of de-risking. The most worrying aspect of de–risking is the fact that citizens and businesses alike still need to make payments and if traditional banking channels are no longer available, transactions are likely to be forced into alternative channels, which may be less well regulated.
In a certain way, de-risking represents a regulatory failure.
Ensuring that everyone has the right skills for an increasingly digital and globalized world is essential to promote inclusive labour markets and spur innovation, productivity and growth.
WSBI particularly welcomes initiatives to enhance digital skills of the youth, such as the digital opportunity initiative launched by the European Commission, aimed at boosting digital skills on a cross-border basis through internships.
WSBI also points to the importance of financial education for all segments of the population: young people, employees but also business starters. Financial institutions, public authorities and non-governmental organizations should collaborate to make sure citizens have access to objective and accessible information throughout their life cycle.