In Malaysia, the commitment to the financial inclusion agenda is legislated under the new Central Bank of Malaysia Act 2009 which provides as one of our primary functions – to promote the development of a sound, progressive and inclusive financial system. Malaysia’s financial inclusion agenda has been developed in concert with the development of the overall financial sector and encompasses the five broad strategies. Our blueprint for the development of the financial sector for the next decade will give special focus on financial inclusion and consumer protection. In the previous decade, the focus was  2  BIS central bankers’ speeches  to enhance the access to financing, financial education and putting in place the supporting institutional arrangements to enhance financial inclusion. While these efforts will be intensified further in this next decade, greater leverage will be made on technology and on new institutional arrangements to extend the outreach to the range of users from households to micro enterprises and small and medium scale enterprises. Also important is the development of the enabling environment conducive for innovation of the range of financial products and services needed for the spectrum of society and businesses and for cost effective pricing to take place. This will be reinforce by the supporting infrastructure for the effective management of risks by financial institutions; strengthening of the development financial institutions; and putting in place a comprehensive consumer protection, redress and education framework. These strategies are pursued under a collaborative approach that effectively combines with the efforts by the private sector.

These barriers include problems that relate not only to the physical access to financial services but also the high costs of the services and conditions that deter such access that result in disengagement in using financial services. Policymakers can contribute in five significant areas in advancing the financial inclusion agenda. The first is to give clarity to the financial inclusion agenda, in addition to driving the national commitment to financial inclusion. This includes defining the goals for financial inclusion that needs to be broad based and comprehensive. Universal access to basic financial services is desirable, but this needs to be differentiated according to the different segments within the economy. At one end of the spectrum, this may include those households and micro enterprises that will benefit from being brought into the economic mainstream while at the other end of the spectrum are those households and small and  BIS central bankers’ speeches  1  medium scale enterprises that are already in the economic mainstream but are disadvantaged because they are not able to participate effectively in the financial system. The goal should also be to achieve sustainable financial inclusion outcomes. Secondly, policymakers have an important role in creating the right incentives and competitive environment for financial institutions to respond to the opportunities in financial inclusion. Interventions by the Government should not result in market distortions. As part of the regulatory regime is, however, the promotion of responsible behaviours to ensure access to financial services will be fair and at cost effective pricing.