Financial Services Volunteer Corps Financing for Development Initiative Financial Governance &...
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Transcript of Financial Services Volunteer Corps Financing for Development Initiative Financial Governance &...
Financial Services Volunteer Corps
Financing for Development Initiative
Financial Governance & Capacity Building: Can a Global Corps of Financial Experts Help??
Elizabeth M. Wood
New York Meeting
June 22-23, 2005
2
FSVC’s Mission
To help build the sound financial infrastructure required by countries seeking to develop transparent, market-oriented economies.
• A functioning banking system is a prerequisite for a successful market economy
• Strong and healthy banking systems are essential to fostering sustained economic growth and creating jobs
3
Our Approach
• Private-public sector partnership
• US registered Not-for-profit (501 (c) 3) organization
• Our model uses active, senior level financial, legal and regulatory professionals serving as volunteers
• Both Public and private sector counterparts are served in the emerging markets: regulators and market practitioners
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Our Track Record • Founded 15 years ago at U.S. presidential
initiative
• Initially focused on US volunteers, now global
• Private sector voluntary expert advice Over 5,500 experts from the financial, legal and regulatory communities have gone on over 1,500 programs since inception
• Leveraging the development dollars by using pro-bono professional service hours Value of assistance provided is more than double the amount of government and private grants awarded to FSVC
5
Current FSVC Operations
• During 2004, FSVC delivered 149 programs in 20 countries
• Current offices in 12 countries: -Afghanistan
-Albania-Bosnia and Herzegovina-Croatia-Egypt-India-Indonesia-Jordan-Macedonia
-Morocco-Russia-United States
• Full-time staff of 55: -32 in New York & Washington
-23 Overseas
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What can a private Global Corps ofFinancial Experts Help with?
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Benefits of Independent Short Term or Voluntary Experts
• Bring current market practitioner perspectives on governance and specialized financial issues
• Very fast response times
• Unbiased expert advice
• Bring broader information and global benchmarking to help alleviate roadblocks or political tensions arising out of one institution’s specific policy advice
8
Enhancing Country Capabilities in Financial Governance
• Goal #1 : Institutional creation and development
– Specialist training for bank and non-bank regulators in international best practices
• CBR examiners to certify bank compliance with new depository insurance (Russia)
• Special assessments of counterpart as prelude to designing effective technical assistance (Egypt)
– Creating specialist units inside existing government organizations• New Internal Audit group at MOF (Afghanistan)
– Creating Banking & capital market associations • Private Bankers Association of Iraq (Iraq) • Croatia Stock Exchange governance code (Croatia)
– Specialty education in partnership with private sector associations• Risk management and compliance education on Basel II (Indonesia)
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Enhancing Country Capabilities in Financial Governance
• Goal #2: Design and Evaluate Frameworks for Business Promotion and Risk Mitigation
– Legislation and regulatory framework reviews
– Compliance with international documentary, statistical and reporting frameworks
– Critiques of incentives offered from market practitioner vantagepoint
– Broad financial governance training, at both public sector and private sector counterparts
– Cost effective public education on best practices in securities markets, housing finance and other structured or securitized projects
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Issues Today for Country Counterparts
• Accounting and Legal Standards organizations are an after-thought in much of the emerging markets, usually only driven by crisis
• Half- finished financial sector architecture reforms (see Asia)
• Under or Unfunded Local Counterparts for critical training or governance reforms
• Most training from Multilaterals is still aimed at the small pool of government counterparts, not broader financial market participants.
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Roadblocks Today for Private NGOs
Speed to Market
• Competitive Bid process requirements are onerous if using volunteers or short term consultants
• Panels have tended to qualify either very big organizations or individuals only, not smaller or specialized NGO’s (MCC)
Sustainable Funding
• Internationally oriented funding largely geographically constrained from major donors
• Short term funding (1-2 years)
• No core funding support; all program specific
• Very costly to bid for multi-laterals (preparation and evaluation times often exceed a year)
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Potential Solutions
• Set clear country benchmarks for financial sector governance issues in pre-agreed fashion with governments, focused on implementation plans and timeframes for new domestic watchdogs or institutions
• Design jointly funded programs for governance reforms to include elements of both residential advisors and short term private sector market practitioners
• Consider longer periods of core funding to allow private NGOs to become specialist intermediaries for supervising the implementation of key reform areas
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Potential Solutions
• Alliances with established reputable training centers in emerging markets • Bahrain Institute of Banking and Finance (for Afghanistan)
• Set up Pre-qualified panels of private and governmental experts in key areas:• Risk Certification and training design
• Public audit bodies and financial transparency agencies
• Internal & Forensic Audit
• Public market corporate governance standards (Securities and Ombudsman roles)
• Agree transparent, easy methods for selecting consultants with more emphasis on pre-qualified contractor postings & final selection by counterparty users