Atiur Rahman, PhD
Governor, Bangladesh Bank :
For quite some years now, governments and central banks/financial sector authorities in all SAARCFINANCE member countries are employing financial inclusion as a tool for promoting social inclusion and social empowerment of the underprivileged population segments; with evident gains in terms of faster human development and retreat of poverty. Besides, promotion of inclusive financing for MSME output initiatives of these underprivileged population segments have yielded important gains in domestic demand driven output and employment in the SAARCFINANCE member countries, largely compensating for weakness in export led growth due to prolonged demand slack in advanced economies since the global financial crisis.
Indeed, financial inclusion initiatives in the SAARC region do deserve credit for the region’s post global financial crisis output growth trend at nearly twice the rate of global output growth, with intraregional trade also growing much faster than global trade growth.
In Bangladesh, promotion of inclusive financing and environmentally benign green financing are going together in a BB initiative of ingraining a socially responsible financing ethos in the country’s financial sector; with concerted package of sustained thrusts on motivation, enablement, appropriate policy support. All banks and financial institutions in Bangladesh are by now fully onboard with enthusiastic engagement in inclusive and green financing initiatives, and development partners like the IDA, ADB, JICA, IFC have extended helping hand in policy support (low cost refinance lines) and TA support. The government has also helped with interest subsidy in financing for farming of some high value exotic crops.
Inclusivity and environmental sustainability are now issues routinely reviewed in formulation of BB’s monetary and financial policies. BB is proactively engaging in regional and global cooperation and mutual learning forums like SAARCFINANCE, APRACA, AFI, UNEP etc.; BB is now a Steering Committee member of AFI, and co-chair of its SME financing working group.
It is very heartening that all SAARCFINANCE member central banks are already actively engaging in financial inclusion and green financing initiatives with encouraging performance in upholding broad based growth and macro financial stability; while central banks in advanced economies still remain tied to directionless QE with mediocre growth outcomes accompanied by risk buildups in asset and commodity markets.
We SAARCFINANCE member central banks can work closer together to steal a march on our advanced economy counterparts in better sustaining our growth and stability over the longer term. Besides knowledge sharing on each other’s approaches towards choice of optimal options, we can perhaps combine efforts in engaging think tanks of our region in systematic impact evaluation of the various financial inclusion approaches based on cross country data, as also in establishing firm theoretical underpinnings for our initiatives by clearly identifying the feedback paths linking the inclusion initiatives with output growth, employment growth, and macro-financial stability outcomes. Establishing of such linkages will put paid to skepticisms still prevailing in central banking orthodoxies in advanced economies about appropriateness of developmental role of central banking.
