ashraf mahmood wathra : the importance of financial inclusion in pakistan speech by mr ashraf mahmood wathra, as acting governor of the state bank of pakistan, at the bank alfalah mobile commerce conference 2014, karachi, 13 march 2014. * * * assalam - o - aalaikum and good morning it is my great pleasure to join you at the international conference & exhibition on mobile commerce in pakistan, and share with you some of my thoughts on this important subject. i must congratulate the organizers and sponsors for their efforts in bringing together the stakeholders of mobile banking eco - system at one platform. being a regulator of banking sector, sbp believes that financial exclusion is hindering our fellow citizens in availing economic and business opportunities. today, there are an estimated 2. 5 billion adult people worldwide who do not have access to formal financial services. according to world bank ’ s global findex survey, almost 80 percent of those living within incomes of less than $ 2 per day are financially excluded. pakistan is a country of over 180 million people living in geographically diverse areas. our branch network of almost 12, 700 is insufficient to serve the millions of unbanked masses. banks operating in pakistan are hosting only 35 million customer accounts including 3. 5 million accounts opened by branchless banking providers. despite phenomenal spread of banking business in pakistan, we have a long way to go to achieve digital financial inclusion in the country. given the complexities and challenges of limited financial access in the country, state bank of pakistan has adopted a multi - pronged and long - term strategy to address financial exclusion through structured policy & regulatory actions, and market - development interventions. our program initiatives have been catalysing the market developments and fostering market ecosystem to especially promote innovative ways of doing banking business. as we all know that people around the world increasingly use technology and communication networks to live, work, socialize and remain informed and entertained through the use of online services via personal devices like pcs, smartphones and computer tablets. therefore online and other - off - branch modes of doing banking transactions have reduced the hassle of visiting a conventional bank branch to a considerable extent. ladies & gentlemen, pakistan is amongst the pioneers of mobile / branchless banking in the developing world. our branchless banking framework and models have achieved worldwide recognition and remarkable success in a short span of four and a half years. this could not have been possible without an effective and enabling regulatory regime, dynamic

over national payment systems, central banks guard against systemic risks that could be transmitted via these systems. there are therefore clear synergies between financial stability and other tasks. central to these synergies is the wealth of knowledge on the financial system through the central bank´s active presence in financial markets. again, the structural differences in financial systems across the euro area mean that the financial stability task is more appropriately located at the national level, although communication and co - ordination across borders are increasingly important. whereas all national central banks have a financial stability task, not all have direct competence in the field of prudential supervision. the choice to delegate the supervisory task to the central bank is, of course, based on national circumstances and preferences. however, the important synergies between the financial stability and supervisory tasks should not be ignored. i will come back to this issue when i discuss the supervisory arrangements in the netherlands. in general, it is important to stress that on both a national and european level the national central banks remain involved in discussions on prudential supervision. this is essential for the proper execution of their financial stability task and, as such, enables the system to contribute to the smooth conduct of supervisory policies. recent developments in europe regarding supervision recently, the perception of increased cross sector and cross border financial integration has resulted in demands for enhancing the supervisory structure in europe. i fully subscribe to the ambitions to speed up the regulatory process of supervision in europe. moreover, the convergence of supervisory practices would serve a level playing field in european financial markets. last year, a european committee under chairmanship of mr brouwer – director at the dutch central bank – made several recommendations on this point. as i explained, the involvement of national central banks will continue to offer welcome expertise in assessing the supervisory needs and challenges of financial integration. concerning topics directly related to financial stability and systemic risks, the national central banks will be at the frontline of european discussions, together with their counterparts from the ministries of finance. however, i would warn against the suggestion of introducing a single european supervisor. it is a misconception to expect that a top down approach to the design of supervision in europe would promote financial integration. clearly, that would simply ignore the structural differences on the national level. indeed, the practice of emu has shown that a critical mass in integration is needed before institutional convergence ( i. e. the introduction of the euro ) can work as a catalyst. likewise, i would warn against the suggestion that