muhammad bin ibrahim : towards proportionality in practice – financial inclusion and implementation of global standards opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the global symposium on proportionality in practice, kuala lumpur, 28 may 2015. * * * ladies and gentlemen, thank you for the opportunity to speak today at the opening of the global symposium, with the theme “ towards proportionality in practice : financial inclusion & implementation of global standards ”. financial inclusion has captured the attention of many decision makers around the globe. we can confidently say that we have been successful in educating the world on the importance of ensuring access and usage of quality financial services by all segments of society. i think it has dawn to the power that be that financial inclusion empowers low income households and smes to improve their livelihood and because financial inclusion provides equal opportunities ( and hopefully, it appropriately designed, equal outcomes ), it also enables the under served to save in a secure manner, invest in productive activities and protect against unforeseen shocks. financial inclusion, based on empirical evidence also reduces inequality 1, which in turn supports inclusive and sustainable growth, by allowing the poor to stay healthy, stay out of poverty, pay for education and accumulate human capital 2. it is, a very worthwhile agenda to pursue. the scale of the unbanked in term of numbers is still significant globally and financial inclusion as a development agenda can contribute immensely towards resolution of this matter, but it requires collective and concerted efforts among diverse group of people. according to the findex 2014 data by the world bank, 2 billion adults worldwide do not have access to financial services. the international finance corporation and mckinsey reports that 380 million micro, small and medium enterprises in developing countries do not have adequate access to credit. the extent of financial exclusion is still formidable. recognising the scale and extent of financial exclusion, national authorities, regional groupings and international organisations have elevated financial inclusion as a policy priority. in malaysia, we had decided to legislate this agenda into our statute as one of bank negara malaysia ’ s primary functions, embedded in the central bank act 2013. recently, at the regional level, the asean finance ministers and central bank governors agreed to establish a financial inclusion working committee to deliberate and coordinate efforts to enhance financial inclusion within its member countries. international organisations such as the alliance for financial inclusion ( afi ), the world bank and the united nations capital development

fund ( uncdf ) are also actively developing financial inclusion knowledge, and supporting countries in implementing financial inclusion strategies globally. over the years, we have since witnessed the rapid deployment of innovative financial inclusion solutions that have changed the lives of many. since the introduction of the mpesa mobile banking service in kenya, the number of adults with access to financial services has increased from 42 % in 2011 to 75 % today. agent banking in malaysia has provided consumers with an innovative and alternative channel to access financial services, resulting in the percentage of sub - districts served by financial services access point to increase from 46 % in 2011 to 96 % in 2014. this has enabled 99 % of malaysians, particularly those in rural areas, to conveniently access and benefit from financial services. the microfinance “ global financial development report 2014 ”, world bank, 2014. discussion note “ redistribution, inequality, and growth ”, imf, 2014. bis central bankers ’ speeches institution grameen bank in bangladesh has extended credit through its 2, 500 branches to almost 8 million people, with 60 % of them lifted from poverty. the loan recovery rate is higher than 98 percent. the experience in bangladesh, in particular, dispels the myth that the poor is not bankable. of proportionate regulation and the global standards the proportionate application of global standards for financial regulation is a critical factor in enabling innovative financial inclusion solutions, ensuring its delivery in a safe and sound manner. my remarks today will touch on the following topics : recent developments in global standards and financial inclusion ; focus areas to advance proportionality in practice ; and the importance of the global symposium to galvanise action. 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 /