john a rolle : the importance of financial inclusion in mending social and economic disparities welcome remarks by mr john a rolle, governor of the central bank of the bahamas, at the alliance for financial inclusion ( afi ) convergent meetings of the digital financial services working group and the consumer empowerment and market conduct working group, nassau, 26 march 2019. * * * welcome to the bahamas. we are pleased to host both the digital financial services working group and the consumer empowerment and market conduct working group meeting in the bahamas this week. the central bank of the bahamas joined afi less than one year ago, in order to benefit from a structured approach to promoting financial inclusion goals, and to learn first - hand from countries that are actively pursuing such ideals. the range of countries that make up this alliance illustrate aptly that financial inclusion is intended to mend social and economic disparities that are often obscured in average measures of economic wellbeing and income. the bahamian experience draws this out. on a per capita basis, the bahamas has the third highest gdp in the western hemisphere. our financial sector is highly developed, when considered in terms of the size of the deposit base and outstanding credit of the domestic banking system, relative to gdp ; and in terms of the share of the population that has access to basic banking services. moreover, relative to the size of the population we enjoy the 35th highest density of bank branches in the world and the 15th highest density of automated banking machines in the world. 1 from an identity perspective, members of the population do not have extreme difficulties acquiring birth certificates or primary documentation needed to apply for identity documents. but financial access is very uneven. on many of our rural island communities basic banking services are not available, or only available in very constrained conditions. the rising costs of providing banking through traditional physical channels have further scaled - back this access. also, high concentrations see the imf ’ s 2018 financial access survey database : data. imf. org /? sk = 388dfa60 – 1d26 – 4ade - b505 - a05a558d9a42. of undocumented immigrants are excluded from access to financial services, even when these services are available in the same spaces for documented persons. equally problematic for countries like the bahamas, there has been a dilution of access from the disproportionate application of global anti - money laundering and counter financing of terrorism standards, on low - risk, retail

private sector. this makes it crucial to restore the treasury ’ s good credit rating. not only will this pave the way for domestic enterprises to external financing, it will also significantly reduce the likelihood of a fire sale of domestic assets once the capital controls are lifted. the principal task of the economic recovery programme drafted in co - operation with the imf is to restore confidence in the treasury ’ s ability to meet its foreign currency obligations. how can this be done? first, by practicing sufficient fiscal restraint to convince financial markets that, despite a temporary spike in indebtedness in the wake of the banks ’ collapse, the treasury will be fully capable of meeting its international obligations ; i. e., that its debt position is sustainable for the long term. second, the treasury has to demonstrate that it has access to sufficient foreign currency reserves to repay, if it comes to the crunch, loans maturing over the next two years. we still are just short of reaching this position, as efforts to achieve it have been delayed for reasons known to all of us. here it is important to bear in mind the common saying that banks, domestic as well as international, are ready to offer you an umbrella on a sunny day, only to demand it back promptly once the rain starts to fall. anyone needing an umbrella when it ’ s raining has to show that he can get alternative one on demand. loans from the imf and others are our umbrella. in the third place, co - operation with the imf is important not only because of the access to credit contingent on the progress of the programme. the fund serves as a sort of validation agency for the economic policies of countries that find themselves in economic difficulties. its stamp of approval is a precondition for obtaining credit not only from other countries, but also from foreign banks and investors. in many instances it is a premise for foreign investment in domestic industry. this view has been clearly expressed in interviews with numerous foreign bankers, who are prepared to take iceland to the global credit market as soon as the uncertainty delaying the progress of the programme is eliminated. many find the medicine prescribed by imf bitter, and have requested a more palatable economic strategy without the fund ’ s involvement. of course, it would be desirable to use automatic fiscal stabilisers or discretionary fiscal policy to mitigate the economic cycle. countercyclical fiscal policy, however, is a privilege reserved for countries whose credit rating has not been tarnished. iceland does not enjoy