Michelle W Bowman: Panel remarks - 2023 Symposium on
Indigenous Inclusion
Panel remarks by Ms Michelle W Bowman, Member of the Board of Governors of the
Federal Reserve System, at the 2023 Symposium on Indigenous Inclusion, The Central
Bank Network for Indigenous Inclusion and The Reserve Bank of New Zealand-Te Ptea
Matua, Auckland, 27 September 2023.
* * *
Governor Bowman was asked to make remarks responding to two questions. Below are
the questions and her responses.
Panel Question 1: Why should Indigenous financial inclusion be a core focus for central
banks?
I'd like to thank the Reserve Bank of New Zealand and Governor Orr for hosting this
symposium and for the invitation to participate.1
It is an honor to join my Network colleagues for this important discussion. As the
Federal Reserve Board's representative to the Network, I recognize and acknowledge
that the United States and the foundation of its economy were built on land enriched by
its original Indigenous inhabitants and their stewardship of its natural resources.
Recent natural disasters affecting Indigenous communities in Network countries
highlight the importance of our work. Those harmed by the recent wildfires in Hawaii
and Canada, as well as Cyclone Gabrielle here in New Zealand, face substantial
economic headwinds. I hold these communities close in my thoughts.
I see two fundamental reasons why central banks should focus on Indigenous financial
inclusion. The first is our responsibility to foster an economy that works for everyone.
Second is the wisdom we can gain from community-led approaches to expanding
financial opportunity.
In order to effectively support inclusive economic growth, we need to understand the
economic conditions of Indigenous communities. The Federal Reserve's ongoing
research and outreach enable us to gain insight about economic barriers that
Indigenous communities face. Our recent research notes several challenges, including
those related to labor market conditions, affordable credit and financial services access,
homeownership, and broadband access. Our efforts to understand these challenges
support our ability to provide information and resources that can help address the
needs.
For example, our research has found that Indigenous communities have less access to
high-speed internet. During the pandemic, Indigenous communities participated less in
remote work-which may, in part, reflect this lack of access. In addition to our research,
we will convene a conversation among Indigenous communities, federal policymakers,
and researchers to discuss the challenges and opportunities to advance broadband
service networks.
Our research has also shown that on average, Indigenous borrowers pay more for
home loans. While there is a diversity of housing conditions, land tenure, and very
different legal frameworks governing lending and other financial services for Indigenous
communities, our research helps raise awareness of the challenges and informs our
work to promote Indigenous homeownership.
Our research has also found that the lack of credit and financial services access is a
key barrier to economic development in Indigenous communities. Native Community
Development Financial Institutions-or CDFIs-play a vital role in addressing this credit
and financial services gap.
The Federal Reserve's research and engagement efforts have significantly advanced
our understanding of the economic barriers for Indigenous communities, but there is still
much to learn. The Center for Indian Country Development is working to address data
gaps of U.S. Indigenous populations to provide needed information to their leaders,
policymakers, and practitioners to inform decisions that best serve their communities.
The Center has developed datasets on Indigenous community labor market conditions,
reservation profiles including key demographic and economic indicators, and a tool that
identifies economic development resources and opportunities in these communities.
The Center is currently developing a Native Entity Enterprise Dataset to better
understand businesses owned by Alaska Native corporations, Native Hawaiian
organizations, and tribes.
In addition to identifying economic needs, these datasets can help policymakers direct
resources where they will be most effective. Above all, these datasets equip Indigenous
communities with information to plan their economic futures.
Financial inclusion is an important focus for central banks, and Indigenous-led
approaches can help further efforts to achieve an inclusive economy. Native CDFIs
serve as critical sources of credit and financial services for Indigenous communities,
and their unique lending practices provide new insights about strategies to reduce loan
delinquency risks. Like community banks, Native CDFIs take a holistic approach to
assessing credit risk, which includes conventional measures like credit scores and
community- and character-based criteria that leverage their understanding of their
communities and customers. In a recent study of Native CDFI loan data, we found that
these customer relationships can reduce uncertainty in lending outcomes. These
research findings could be useful for other financial institutions serving Indigenous
communities.
The Fed has also increased Indigenous participation on boards and advisory councils
and has hired staff to engage with these communities. We are working to ensure that
Indigenous perspectives inform our work and create new opportunities to learn from
their practices and approaches.
Thank you for the opportunity to reflect on this important area of focus for central banks.
I look forward to hearing from my colleagues on this topic.
Panel Question 2: What two or three key actions taken by your organization have been
instrumental in accelerating progress towards Indigenous financial inclusion?
In recent years, the Federal Reserve has improved efforts to focus on Indigenous
communities, including convening listening sessions and outreach events, conducting
research in partnership with these communities, supporting economic and financial
education, and offering programs that build the capacity of Indigenous organizations.
Our Reserve Banks lead these efforts, and our involvement in the Central Bank
Network for Indigenous Inclusion broadens our perspective as we engage in this work.
We are accelerating progress in three ways: The first is engagement. Our work to
advance Indigenous financial inclusion requires that Indigenous communities value the
Fed as a trusted partner and resource. Throughout the System, we are engaging these
communities through outreach events, including listening sessions and tribal leader
roundtables to discuss economic issues-from housing to early childcare, and from
education to business.
One of these engagements, an affordable housing forum in Hawaii, led to financing
discussions for housing projects that will benefit Native Hawaiian communities. Another
facilitated a small business lending working group that regularly convenes local, state,
and federal partners to address challenges with access to capital for Alaskan small
businesses, especially those owned by Native Alaskans. This group has helped
connect local Native CDFIs to banks and state and federal partners for funding and
technical assistance.
We also recently partnered with national Indigenous organizations to host a webinar
featuring new research on the opportunity for Indigenous business entities to engage in
federal contracting. The event brought together a range of Indigenous enterprise
executives who reflected on research, discussed challenges and opportunities for
Indigenous entities pursuing federal contracting, and shared their own stories of
economic diversification.
Conversations like this support our Indigenous partners-by allowing us to share our
research insights and by providing a forum for Indigenous community members to
share their own stories and perspectives.
The second way we are making progress is research. We are conducting research for
and with Indigenous communities. Accurate, comprehensive information on Indigenous
economic conditions helps to identify challenges and opportunities, providing data to
inform decisionmaking.
The Federal Reserve's Small Business Credit Survey gathers information to help
policymakers understand changes in small business credit practices. The survey now
includes Indigenous small business owners, which improves our understanding of their
conditions and needs.
We also conduct a recurring survey of CDFIs, including Native CDFIs, to understand
their current challenges and opportunities.
We continue to conduct research in consultation with Indigenous-led organizations and
tribal governments. Our research is conducted in accordance with data principles
recognizing the important responsibilities associated with collecting and analyzing
Indigenous data to ensure that Indigenous data sovereignty and governance are
respected.
The third, and perhaps most important, is empowerment. Our research and programs
enable our Reserve Banks to assist Indigenous communities through information and
resources to plan their own economic futures.
For example, our Native Economic and Financial Education Empowerment program
works with Indigenous communities to provide free economic and personal finance
education that incorporates Indigenous language and culture.
Our Working Communities Challenge facilitates local collaboration to increase
economic opportunity in rural areas. This program serves as a first-of-its-kind venue to
connect tribal leaders, nonprofit organizations, and private- and public-sector leaders
around economic development efforts. Most recently, leaders convened to understand
data gaps across the full partnership and how they can better leverage data across
organizations as they work toward expanding the number of living-wage jobs and
reducing rates of childhood poverty within the community. Indigenous voices and
perspectives are a critical part of this effort.
We're also developing new data tools and research partnerships that help Indigenous
communities conduct research on economic opportunities. For example, our Native
American Funding and Finance Atlas is a publicly available interactive map tool that
identifies the financial institutions, lending activity, and economic development
programs in their tribal community and surrounding areas.
I'm proud of the Federal Reserve System's efforts to further Indigenous financial
inclusion, and I'm grateful for this opportunity to learn from the dedicated efforts of our
Network partners.
There is so much important and impactful work happening, and I look forward to the
progress that we will continue to make together.
Thank you.
1
The views here expressed are my own and not necessarily those of my colleagues on
the Board of Governors of the Federal Reserve System or at the Reserve
Banks. Return to text