G20 Leaders’ Declaration should highlight proportionality

March 29, 2022

The concept of proportionality can help increase financial access, and should be addressed in the G20 Leaders’ Declaration, CUNA President/CEO Jim Nussle wrote to Treasury Secretary Janet Yellen Tuesday. The letter includes language CUNA requests be included in the Leaders’ Declaration.

Proportionality allows national regulators to tailor rules often designed for large, internationally active banks to allow local, community-based financial institutions to operate.

“This G20’s willingness to embrace financial inclusion, coupled with the challenges faced by national-level regulators in achieving financial inclusion vis-à-vis proportionality, is precisely why the collective international credit union movement is urging the G20 to take action,” the letter reads. “Proportionality, if applied appropriately, can significantly advance the G20’s goals of promoting financial inclusion by fostering responsible finance through increased access to responsible and affordable financial services.”

CUNA requested the following language on proportionality be included in the Leaders’ Declaration:

The G20 is committed to continuing its efforts to reduce inequalities and promote inclusive growth. Financial inclusion reduces inequality, which in turn supports inclusive and sustainable growth by allowing the vulnerable to remain healthy, stay out of poverty, pay for education and accumulate human capital. The proportionate application of International Standards for financial regulation is a critical factor in enabling innovative financial inclusion. Financial inclusion provides for more stable markets by bringing more depositors and deposit accounts into the financial system. To this end we direct the Financial Stability Board (FSB) and standard setting bodies to coordinate efforts to further develop the ecosystem such that the requisite capacity to implement proportionality in practice is enhanced. We direct the FSB and standard setting bodies to report progress on the implementation of proportionality for financial regulation annually to the G20.