Toespraak van Koningin Máxima op het congres van de Autoriteit Consument en Markt over innovatie en toezicht

Toespraak | 20-06-2014

Mr Fonteijn, ladies and gentlemen,
I am delighted to be here today. ACM is celebrating its first anniversary and has decided to do something special. It takes a lot of courage to invite such a distinguished international company of experts to your first birthday celebration to discuss how innovation can make oversight more effective. I applaud ACM for taking this attitude.

We all share ACM's belief that market authorities play an important role in society and should be aware of the socioeconomic context in which they operate. ACM clearly sees itself in this light: its primary goal is increasing consumer welfare and promoting opportunities for businesses and consumers. The objective is sustainable welfare growth, in both the short and the long term.
In other words: it's all about equitable development.

As the UN Secretary-General's Special Advocate for Inclusive Finance for Development, I have seen how essential market authorities like ACM are in making equitable development possible. In many countries, central banks and other supervisors are committed partners in overcoming obstacles to growth. In the last ten years we have seen them become enablers in the provision offinancial services to those who need them most. They have really risen to the challenge and seem to relish it!

Before I elaborate further, let me say something about financial inclusion, why it matters and why I devote so much of my time to it.

At present 2.5 billion adults - that's half the adults in the world - have to do without even the most basic financial services that you and I rely on every day. They are excluded from the formal financial system. No bank account. No cash machine. No safe way to save money. No insurance. No credit beyond what they can borrow from a loan shark.

Without financial services, families have to use complicated and risky tools to manage their money and make ends meet. These complicated solutions can cost them more than twenty per cent of their cash. This is how poverty becomes a trap.

Entrepreneurs also face serious obstacles. Nearly half of the 400 million SMEs in emerging markets lack the financing they need to grow, while in developed markets this remains a significant challenge as well. Lack of access to financial services is hindering job creation and growth - in Africa, Asia, Latin-America, but also here in Europe.

Only by joining forces can we break the vicious circle of poverty and lack of opportunity. This requires a great deal of effort from us all.

The crucial dilemma supervisors face is how to safeguard stability and consumer protection without getting in the way of innovation. It's not easy to strike the balance, given the rapidly changing environment regulators and supervisors find themselves in. Today's conference focuses on precisely that issue.

Sometimes a change of perspective can help. An inspiring example from my own personal experience comes from Africa. A continent where only twenty per cent of people have access to formal financial services and where 'bricks-and-mortar banks' are very scarce.

On the other hand, Africa's mobile phone market is booming. Over the last decade, the number of mobile subscribers leapt from 18 million to more than 400 million. That is approximately seventy per cent of the continent's entire population! And in this mobile
revolution, Kenya has been a trailblazer.

In 2005 Vodafone, together with its partners, decided to take the plunge and unlock Kenya's potential in mobile financial services. It launched a new service which is called M-Pesa.

M-Pesa allows users to deposit money into an account linked to their cell phones. They can transfer money, pay bills, receive and repay loans and send remittances home throughout the whole country.

The new service has proved a huge success. Right now, sixty per cent of adults in Kenya are using it.

This has had a tangible effect on people's lives. In Kenya it means being able to send 10 dollars to your mother in the countryside instantly. Or being able to start or expand your own business, investing in tools and stock. Or to safely save your money, making you more independent and less vulnerable to external shocks.

M-Pesa has led to many other interesting innovations. Like a programme enabling farmers to save in small amounts in order to buy a water pump or solar panels.

None of this would have been possible without the help of regulators and supervisors. In fact, the Central Bank of Kenya was engaged in the whole process from the very beginning, in 2005.

It took an innovative and open-minded attitude on the part of the Central Bank to make simple financial transactions outside of bank branches possible. For example, an adequate 'Know Your Customer' approach had to be developed, striking the right balance between access and security.

And there were other issues too. Should they supervise telecoms? When does a money transfer become a deposit? And then there is capacity. For developing countries, capacity is the first constraint in supervision.

As more and more people are gaining access to financial services, regulators and market authorities all around the world are facing the very urgent challenge of ensuring that consumers are well protected. Especially when consumers are exposed to products that are new to them.

Mobile and electronic banking raise safety and privacy issues which require new kinds of supervision and new consumer capabilities. In developing countries, consumers are often illiterate and vulnerable. But also here in Europe, consumer protection is extremely important.

Children and young people in particular are at risk. Teaching young people how to better manage their money is the best way to create financial awareness and resilience and prevent them from getting into unnecessary trouble.

That is why I focus my attention on the importance of financial education, as honorary chair of the Money Wise platform in the Netherlands.

Inclusive financial systems must go hand in hand with responsible finance, financial education and consumer protection. Consumers need to have the knowledge to be able to take advantage of improved access to financial services, and to be effectively protected from misconduct and fraud.

We know that people with proper financial skills have a better grip on their personal development. They are better prepared for risks and can better withstand hard times. This is why in many countries, like Brazil and Indonesia, national strategies are being implemented, integrating financial education programs in their financial inclusion policies.

Market authorities around the globe are facing the same challenges and are looking to each other for best practices. So it is very important that we focus on peer learning, like ACM is doing today.

Let us be aware of the need to strengthen the demand side of the market. 'Consumer empowerment' is a necessary condition for well-functioning markets. For the full promise of financial inclusion to be realized, consumers need financial capability and protection.

I'd like to congratulate ACM on its first birthday. And I'd like to congratulate you all - as representatives of the international community of regulators and supervisors - on your willingness to share experiences and to build on existing collaborations.

You are striving to stay in tune with your changing environment, constantly learning and innovating. And that deserves the highest praise.

I wish you all every success with your important work.

Thank you.