Remarks by World Bank Group President David Malpass during Session II – “Financial Sector Issues”
Thank you, Ignazio. I spoke earlier on inequality challenges in vaccines, climate, and debt; and on the World Bank Group’s actions to build a stronger recovery. I thank Minister Taro Aso and others for highlighting the importance of concessional financing and IDA20 to assist the most vulnerable. I’d like to mention several additional topics.
First, to foster financial inclusion, our goal is to support digital systems that allow high transaction volumes at very low cost. That is the essence of inclusion. We are currently assisting digitization of payments linked to safety nets and social protection programs in countries such as Ecuador, Peru, Nepal, South Africa and Tunisia. We are also working on faster payment systems and better ID infrastructure. More than 80 countries have announced new cash-transfer programs. The needs are urgent and could have a long-lasting impact if managed well.
Second, high costs for cross-border payments hamper economic development and cause payments to flow underground. Remittances are essential for poverty reduction. Almost $700 billion in remittances are flowing to developing countries annually, providing vital assistance to families and new investments.
Working with global partners, we are leading efforts to increase efficiency, transparency, and competition in the market for remittances worldwide. IFC has made important investments in platforms for cross-border payments and substitutes for the breakdown in correspondent banking, and we are working to support regulation that promotes both competition and effective AML/CFT regulations. Compliance costs are an important challenge, and we’re working at the country level to support reforms that will encourage low cost, secure transactions, including in populous countries such as Ethiopia and Bangladesh.
Third, developing countries face key challenges related to domestic debt, non-performing loans (NPLs), and bankruptcy processes. We’re working closely with countries on insolvency resolution processes, and better data, and will host a major conference on this next month.
I would like to commend Italy on re-instating the Sustainable Finance Study Group. It will be very important to take full account of the voices of developing countries on all these issues. Diverse input should be voiced on international environmental taxation, on the increased financial regulation related to climate change, and on stable coins. These are all related issues. For example, I noted the concerns expressed today to avoid climate protectionism. I also note with concern that some stable coins and paths to high digital transaction volumes require huge electricity usage, much of it provided by coal, at a time when increased access to low carbon electricity is vital. These challenges require dialogue and wisdom, and we look forward to supporting your efforts toward constructive approaches.
Let me take this opportunity to congratulate Minister Sri Mulyani as the new co-chair, together with Finland, of the Coalition for Finance Ministers for Climate Action. We are working closely with your team, Governor, and with the co-chairs of the Sustainable Finance Study Group for greater synergies and momentum on this important agenda. With Indonesia taking the presidency of next year’s G20, this is a great opportunity for synergy between these two complementary initiatives.
Thank you, Governor.