1. Commentary on the Basel Committee Report on Financial Inclusion Webinar March 10, 2016 9:30 am – 11:00 am (EST)

2. Agenda 2 Welcome, background – Beth Rhyne Commentary on the Guidance Document – Daniel Schydlowsky Further reflections – Njuguna Ndung’u Response from drafting team – Juan Carlos Izaguirre Q&A – moderated by Beth Rhyne Thanks and closing – Beth Rhyne

3. Panelists Dr. Daniel M. Schydlowsky Senior Program Fellow, Mossavar-Rahmani Center for Business and Government Kennedy School of Government, Harvard University Dr. Daniel Schydlowsky was appointed Superintendent of Banking, Insurance and Private Pension Fund Administrators of Peru (SBS) in August 2011 and served through the middle of November, 2015. He concurrently served as President of the Association of Bank Supervisors of the Americas (ASBA) and as Chairman of the Steering Committee (Governing Council) of the Alliance for Financial Inclusion (AFI). He was recently awarded the Edward W. Claugus Award for Excellence in Regulation of MicroCredit. 3

4. Panelists Dr. Njuguna S. Ndung'u Visiting Fellow of Practice at the Blavatnik School of Government, Oxford University. Njuguna Ndung’u served as the Governor of the Central Bank of Kenya and Chair of the Monetary Policy Committee from 2007 - 2015. He also served as the Director of Training for the African Economic Research Consortium (AERC), 2003 – 2007. A long- time researcher and trainer with the AERC network, he has published in international journals as well as in books on economic policy issues ranging from economic growth, poverty reduction, inflation, interest rate and exchange rate issues, to macroeconomic performance in sub- Saharan Africa. An Associate Professor of Economics at the University of Nairobi, Kenya and holds a Ph.D. in Economics from the University of Gothenburg, Sweden, in 1993, Masters and Bachelors’ Degrees in Economics, University of Nairobi, in 1986 and 1984, respectively. 4

5. Panelists Mr. Juan Carlos Izaguirre Juan Carlos Izaguirre is a Financial Sector Specialist with the Global Policy Architecture team at CGAP—a financial inclusion think-tank housed at the World Bank. He is leading work with the Basel Consultative Group’s Financial Inclusion Workstream, and research on deposit insurance for digital finance products, and is member of the OECD Taskforce on Financial Consumer Protection. He joined the World Bank in 2007, where he co-authored the Good Practices for Financial Consumer Protection, and gave advice on financial consumer protection regulation and supervision to authorities in several countries. He began his career as a credit risk analyst in a Peruvian bank and worked for six years at the Superintendence of Banking, Insurance and Private Pensions of Peru, primarily as supervisor in banking, microfinance and consumer protection. 5

6. Background to: “Guidance on the application of the Core Principles for effective banking supervision to the regulation and supervision of institutions relevant to financial inclusion” 6 BCBS began working on financial inclusion in 2008, producing guidance in 2010 that addressed microfinance. In 2012 BCBS, through Basel Consultative Group, launched a WorkStream on Financial Inclusion, which led to the current guidance document Guidance Document uses the BCBS Core Principles (2012 version) as framework to identify adjustments needed in regulation & supervision of inclusive finance. Special annexes on: consumer protection, AML/CFT, alternative forms of supervision, microlending Comment period open until March 31, 2016. Guidance will be revised by the BCS WorkStream, submitted first to Basel Consultative Group and finally to be approved by BCBS, aiming for late 2016.

7. 7 Guidance for Financial Inclusion Selective Comments Daniel M. Schydlowsky, Ph.D. Mossavar-Rahmani Center for Business and Government Harvard Kennedy School

8. The Dilemma of the Supervisors:  Too much to do with too few resources  Much worse in Small Countries  Now add the load of innovation and Digital Finance The Dilemma of the Supervisees who are Pertinent to Inclusion:  Too many rules to comply with  Absorbs a major fraction of their operating capacity The Solution:  Extra-situ supervision w/capacity for stats analysis  Apprenticing High Quality Inspectors for Judgement  Improving Quality Mix of Mgt of Supervisees.

9. Requirements of the Digital Finance Revolution  Know Your Customer  De-Risking  Interoperability & Interconnectivity – paths?  Costs & Economies of Scale - Intl. Overlap? Challenge: Bringing Down the Cost of Inclusive Finance  Industry-wide Procurement  Outsourcing for Economies of Scale  Psychometrics and Big Data for Risk Assessment

10. Add a Dynamic Dimension to the Guidance… Supervisors should:  Keep the financial system safe, and  Help the financial system modernize, become more inclusive and serve the public better, and,  Do whatever is needed to bring about digital finance as soon as possible. The benefits will be legion, this will provide extensive benefits.

11. Njuguna S. Ndung'u Visiting Fellow of Practice at the Blavatnik School of Government, Oxford University. Former Governor of the Central Bank of Kenya and Chair of the Monetary Policy Committee 11

12. Juan Carlos Izaguirre Financial Sector Specialist, Global Policy Architecture team, Consultative Group to Assist the Poor (CGAP) Basel Consultative Group’s Financial Inclusion Workstream 12

13. Question and Answer Please submit your written questions in the question box to the right of this presentation. If you would like to orally comment or ask your question, please click the “raise your hand” button on the right control panel. We will respond to as many questions as possible, but may not get to all of them due to the high volume of participation. 13

14. Thank you! If you have comments we would like to take them into account. We encourage you to submit them to CFI by March 18 or directly to the Basel Committee by March 31. You can submit your comments directly here: http://www.bis.org/bcbs/commentupload.htmhttp://www.bis.org/bcbs/commentupload.htm We will share a recording of this webinar on www.cfi-blog.org later today. A draft of the comments submitted will be available on the CFI website on April 1.www.cfi-blog.org Contact: Allyse McGrath, amcgrath@accion.org Website: www.centerforfinancialinclusion.orgwww.centerforfinancialinclusion.org Twitter: @CFI_ACCION Find us on Facebook! 14