Other Financial Sector Study

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  • Publication
    Open Finance: The Korean Experience and Opportunities and Challenges for the East Asia and Pacific Region
    (Washington, DC: World Bank, 2024-05-28) World Bank
    The importance of data in the economy is exponentially growing. Although the amount of data generated and analyzed in the economy has always grown, the recent growth in data generation and the advancements of analytic technology are much faster than in the past. Open data, which grants the right to data portability to data subjects, is becoming a popular policy option to enhance the efficient use of data in society and reduce privacy costs. The financial industry is one of the leading sectors implementing the right to data portability through open banking and open finance initiatives. Open finance is a natural extension of open banking to sharing customer-permissioned data by financial institutions with third parties. The policy objectives for open finance vary by country. Financial innovation is among the first policy objectives. The Republic of Korea set innovation in financial services, especially in payments and settlements, as the policy objective of open banking. Another objective is competition through financial innovation and the emergence of neo financial institutions such as Fintechs and the big techs. Strengthening consumers’ data-related rights has been a policy objective in many countries. Open finance in the Republic of Korea and General Data Protection Regulation (GDPR) in the European Union (EU) are notable examples. Finally, in some cases, enhancing consumer benefits, through financial innovation and the promotion of competition, has been set as a policy objective. Open banking and open finance will provide more opportunities and challenges to achieve those policy objectives than financial innovation in the past. First, open banking and open finance allow the consent-based sharing of a complete footprint of data rather than specific ones like delinquencies. This sharing results in a significant improvement in the quality and entirety of data sharing. Second, open banking and open finance enable third parties, often not financial companies, to build business models as marketing platforms, advisers, intermediaries, or agents for financial services.
  • Publication
    The Global State of Financial Inclusion and Consumer Protection
    (Washington, DC: World Bank, 2024-03-21) World Bank
    The 2022 Global State of Financial Inclusion and Consumer Protection (FICP) Report is an update to the 2013 and 2017 FICP reports. These surveys aim to provide a timely source of global data to benchmark efforts by financial sector authorities to improve the enabling environment for financial inclusion and consumer protection. To date, this is the only longitudinal and global survey of this nature. As such, this report serves as a valuable resource to shape the World Bank’s country engagements, a reference document for regulators and supervisors and, finally, a tool for both public and private sector actors with an interest in knowing the developments in this sector. The Survey questionnaire covers key topics related to financial inclusion and financial consumer protection (FCP) and aligns with international guidance to financial sector authorities in these areas. Because the report aims to capture both a snapshot as well as trends over time, the survey questionnaire has been modified over the three cycles to reflect the changing policy and regulatory landscape of financial inclusion and consumer protection.
  • Publication
    Gold Investing Handbook for Asset Managers
    (Washington, DC: World Bank, 2024-02-28) Alimukhamedov,Kamol
    Throughout history, gold has played a vital role as a financial asset in the global financial system. It has been prevalent as a currency in many civilizations, including Ancient Greece, Rome, and Egypt. In the modern era, gold continues to play a critical role in the global financial system, serving as a hedge against inflation, a safe haven asset, and a reserve asset for central banks. In recent years, gold has regained its importance as a financial asset, with many investors using it as a hedge against inflation and market volatility. In addition, central banks and other financial institutions continue to hold significant amounts of gold as part of their reserve assets. The increasing awareness of environmental, social, and governance (ESG) issues in the investment community has led to a growing interest in responsible sourcing and use of gold. Initiatives such as the LBMA’s Responsible Sourcing Program (RSP) and the World Gold Council’s Responsible Gold Mining Principles (RGMP) aim to promote sustainable and ethical practices in the gold mining industry. This report first discusses the credentials of gold as a strategic asset by analyzing its historical risk and return characteristics, its correlation with various asset classes, and the historical and future performance of several stylized institutional portfolios with varying allocations to gold. The later part of the report addresses practical aspects for reserve managers of investing into gold and discusses various gold buying practices; gold trading, storing, and accounting; and gold liquidity management strategies. ESG considerations for gold investments are covered in the final chapter.
  • Publication
    Lao PDR Fiscal Incidence Analysis - Raising the Bar: Toward an Equitable and Inclusive Fiscal Policy
    (Washington, DC: World Bank, 2024-01-02) World Bank
    The Lao People’s Democratic Republic (Laos) is facing economic challenges. The country is experiencing a growth slowdown with high levels of public debt. Growing current expenditure and debt service obligations amid sluggish tax revenue led to a widening fiscal deficit in the early 2010s, which remained high into the 2020s despite fiscal consolidation efforts. COVID-19 and deteriorating macroeconomic conditions have disrupted human capital investment and are expected to have worsened the incidence of poverty and inequality. Fiscal policy can be an instrument to address these challenges, but its role has been constrained by a precarious fiscal position. This report analyzes the distributive effects of the Lao fiscal system and potential reforms to address current economic challenges. The analysis adopts the Commitment to Equity (CEQ) methodology to assess the distributional impact of the Lao fiscal system on household welfare. The methodology disaggregates income to include or exclude fiscal interventions to analyze the impact of the fiscal system and each intervention on poverty and inequality. Fiscal interventions can be classified into three categories according to how they are imposed on households: direct interventions (direct taxes, social security contributions, and cash transfers), indirect interventions (indirect taxes and subsidies), and in-kind interventions (public health and education). The framework assesses how progressive a fiscal system and each fiscal intervention are and measures their impacts on poverty and inequality.
  • Publication
    Tracking Progress: Impact Monitoring of Social Finance (November 2023)
    (Washington, DC: World Bank, 2023-10-31) Azhar, Soraya; Alawode, Abayomi A.; Rehman, Aamir A.; Rasid, Mohamed Eskanda; Lavigne-Delville, Jerome
    In recent years, the concept of social finance has gained prominence in Malaysia’s policy and financial circles, particularly with respect to providing support to the underprivileged. This report provides an overview of global good practices and provide specific recommendations for Malaysia to develop the necessary architecture for disclosure of social finance and impact monitoring by banks, insurance companies and other financial institutions (FIs). This report also examines key issues and opportunities related to impact monitoring and reporting of social finance in Malaysia, and aims to provide guidance to Malaysian FIs through self-benchmarking vis-à-vis global good practices to improve the outcomes from their social finance projects. The report is structured as follows: Chapter 1 presents an overview of global and local trends in impact and social impact investing, definitions of social finance, and the concepts of impact monitoring and evaluation. Chapter 2 explores the common principles of impact monitoring, evaluation and disclosure established by international standard-setting bodies and applications by Environment, Social, Governance (ESG) and impact investors. Chapter 3 presents case studies on impact monitoring, evaluation and reporting by global social finance entities and impact investors. Chapter 4 examines the current practices and challenges of impact monitoring and reporting in Malaysia. Finally, Chapter 5 offers recommendations to policymakers to enhance the Malaysian social finance and impact monitoring framework and tools.
  • Publication
    Reserve Management Survey Report 2023: Insights into Public Asset Management
    (Washington, DC: World Bank, 2023-10-27) World Bank
    This survey report represents a collaborative effort between Reserve Advisory and Management Partnership (RAMP) and central banks worldwide to advance the understanding and practice of reserve management. The cooperation of all central banks involved is greatly appreciated, and we anticipate that the findings obtained from this survey will make a valuable contribution to the ongoing success and resilience of central bank reserve management.
  • Publication
    Activating Alignment: Applying the G-20 Principles for Sustainable Finance Alignment with a Focus on Climate Change Mitigation
    (Washington, DC: World Bank, 2023-09-26) World Bank Group; IMF; OECD
    The first action in the G-20 Sustainable Finance Roadmap proposes six high-level principles for the development and global coordination of approaches to align investments with sustainability goals. “Alignment approaches” are national and international frameworks for the financial sector that aim to monitor global sustainable finance flows and ensure that they are contributing to the temperature goals of the Paris Agreement, the Sustainable Development Goals (SDGs), and other international sustainable finance objectives. These approaches increasingly leverage “alignment tools,” which include but are not limited to (a) taxonomies (or classifications) of private sector activities that can be labeled as achieving environmental and social objectives; (b) certifications and labels that confirm that products or services have met environmental, social, and governance (ESG) standards; (c) disclosure frameworks that guide private sector entities to manage and report on their ESG performance; and (d) transition frameworks that help the private sector design a credible shift to low-carbon technologies and practices. The tools can then be applied in different ways—ranging from national-level regulations to voluntary private sector–led initiatives, to corporate-level practices. The tools can be applied by investors and finance providers for different purposes at different levels: at the “asset level” (as in determining whether a project or activity is compatible with a relevant sustainable finance taxonomy or due diligence framework); the “entity level” (as inwhether a corporate or financial institution has a robust low-carbon transition plan and adheres to the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work); or “portfolio level” (as in whether an index is aligned with a credible temperature objective or supports poverty reduction). The G-20 Voluntary Principles for Developing Alignment Approaches provide a common foundation for ensuring these alignment approaches are robust and consistent.
  • Publication
    Emerging Market Green Bonds: IFC-Amundi Joint Report
    (Washington, DC: World Bank, 2023-09-12) IFC; Amundi
    This fifth edition of the ‘Emerging Market Green Bonds Report’ reviews key green, social, sustainability, and sustainability-linked (GSSS) bond market trends in 2022 and outlines our expectations for 2023 and beyond. It also discusses the implications for the asset class of recent developments in policy, regulation, and technology. As in the previous four editions, this year’s report is also the result of joint work by Amundi, a leading European asset manager, and the International Finance Corporation (IFC), a member of the World Bank Group.
  • Publication
    Unleashing Sustainable Finance in Southeast Asia (November 2022)
    (Washington, DC, 2022-11) World Bank; Institute of Finance and Sustainability
    Climate change mitigation and adaptation efforts are urgently needed across Southeast Asia. The financial sector can play a critical role in supporting countries in their journey toward greater resilience and sustainability, but it must adapt to do so effectively. This report shows that while sustainable finance has experienced widespread expansion, sustainable financial markets remain small and unable to meet the funding needs of ASEAN-5 economies for their various sustainability objectives. In fact, the reach of sustainable financial markets is extremely limited, with a sizeable gap especially for small and medium enterprises. Survey evidence reveals that underlying these patterns are marked gaps in climate-related information, capabilities, and investment opportunities. This report highlights the importance of developing the financial architecture for sustainability in financial markets, with emphasis on improving the information environment.
  • Publication
    Scaling Up Ecosystem Restoration Finance: A Stocktake Report
    (World Bank, Washington, DC, 2022-11) United Nations; World Bank
    Humanity is embedded in nature and depends profoundly on the goods and services it generates. Future economic development and well-being hinge on healthy and resilient ecosystems that provide our food and raw materials, drinking water, clean air, and the stability of the climate system. More than half of the world’s gross domestic product (GDP) is generated in sectors such as construction and agriculture that depend on ecosystem services (WEF 2020), making nature relevant not only to policymakers, but also business and financial leaders. The UN Decade on Ecosystem Restoration is an initiative led by the United Nations Environment Program (UNEP) and the Food and Agriculture Organization (FAO) of the United Nations, which aims to drive the restoration of one billion hectares of degraded land between now and 2030. The UN Decade is a rallying call for the protection and revival of ecosystems around the world, for the benefit of people and nature. Only with healthy ecosystems can we enhance people’s livelihoods, counteract climate change, and stop the collapse of biodiversity. The UN Decade Finance Task Force (FTF), chaired by the World Bank, aims to catalyze action which can contribute to unlocking the capital needed to meet the Decade’s goals. ‘Unlocking Restoration Finance: A Stocktake Report’ is the first in a series of outputs of the FTF. This report provides an overview of the current challenges to and opportunities for increasing public and private investment in restoration. It looks at innovative approaches to financing restoration activities taken by actors in the public, private, or non-profit sectors and the potential for these to be replicated or scaled. The report also lays out a draft roadmap of actions the FTF will take to overcome challenges and contribute to scaling investment in restoration.