After almost two decades of high inflation, the rise in prices stabilised in many countries in the 1990s. At the beginning of the 1980s, annual inflation in industrial countries was about 13 per cent. In the course of the following decade, it fell below 2 per cent. Monetary policy in other countries The formal framework for monetary policy varies somewhat across countries. Inflation targeting is the norm in small and medium-sized open economies, and has been introduced in more than 20 countries. New Zealand was the first to do so – in 1989. Canada, Sweden, Australia and the UK followed suit in the 1990s. A number of countries that have not formally introduced inflation targeting have nevertheless oriented their monetary policy towards low and stable inflation in practice. Among them are the euro area countries and the US. Nor does the Bank of Japan have a formal inflation target, but since 9 March this year its monetary policy has been oriented towards achieving an inflation rate of between zero and two per cent in the medium and long term. In a number of countries, price stability is ranked above managing output and employment. Examples are the UK and the euro area. Price stability is regarded as a condition for monetary policy contributing to stable output and employment. In the Federal Reserve Act, in the US, the objectives of full employment, stable prices and moderate long-term interest rates are given equal weight.

Recent developments in global standards and financial inclusion Global standards developed after the Global Financial Crisis were designed to address the financial stability and integrity issues that came to the fore in developed countries. Many of these issues involved the activities of Global Systemically Important Financial Institutions. The effects of these standards on financial inclusion, such as the impact on smaller financial institutions in developing countries most likely were not taken into consideration. Fortunately, Standard-Setting Bodies have now recognised the principle of proportionality, emphasising on the balance between objectives of financial stability, integrity and inclusion. However, the real challenge lies in implementing proportionality in practice. If principles are not implemented in a proportionate manner, there could be unintended consequences for financial inclusion. For example, despite the Financial Action Task Force’s guidance on the implementation of a risk-based approach to Anti Money Laundering/ Counter Terrorist Financing regulation, we have seen large-scale de-risking by international banks, where banks have indiscriminately terminated businesses in certain segments rather than on a case-by-case basis, or based on proper assessments of risk. In particular, international banks have exited entire areas of businesses, such as relationships with Money Transfer Operators, resulting in Money Transfer Operators no longer being able to provide remittances services for customers, mostly migrant workers remitting money to low-income family members. This indiscriminate de-risking deprives poor families of vital financial resources to live healthily, support and educate their children for a better future.