Former governor of Bangladesh Bank Dr Atiur Rahman Thursday described Bangladesh as the 'Silicon Valley of pro-poor financial innovations' and said such innovations have embraced and empowered the people at the base of the pyramid, mostly through bottom-up experimentation.
He was addressing a seminar at the IMF Headquarters in Washington DC on Thursday.
Director of IMF for Asia and the Pacific Dr. Changyong Rhee chaired the seminar.
Dr Atiur Rahman spoke on Bangladesh's experiences on 'Financial inclusion and inclusive growth' and argued that the country's existing social cohesion and broad-based empowerment owe a great deal to innovative financial inclusion campaign, driven by the central bank.
He also credited the Bangladesh government for providing the space for innovation by giving highest emphasis on digitisation.
Dr Rahman said, this policy move for faster digitisation has been democratising and enhancing efficiency and inclusion of financial services.
"The central bank's campaign for financial inclusion complemented with the core objective of government's SDGs, which focuses on the notion of none should be left behind."
He said in addition to supporting inclusive growth strategy based on labour-intensive manufacturing, agriculture, and remittances, this drive for financial inclusion of Bangladesh Bank, together with cheaper health and social solution, helped improve human development indicators of the country.
"All these have led to faster reduction of poverty and enhancement in life expectancy. Agriculture added more value per unit of credit to a great extent due to financial inclusion. Additionally, it helped minimise income inequality, " Dr Atiur Rahman pointed out.
He said, mobile financial services, encouraged and regulated by the central bank, further boosted quality of financial inclusion.
"Targeted credit to MSMEs (micro small and medium enterprises) has also pushed the growth of smaller rural economic units in recent years. All these have been effecting deeper structural transformation of Bangladesh economy, which is witnessing a number of critical transitions."
Given these initial gains, Dr Rahman said, Bangladesh is now moving towards a national strategy of financial inclusion. "This strategy aims at developing ecosystem where all actors, private and public, can work together to include the excluded, minimise the marginalization and vulnerabilities, and leverage the technology for developing efficient delivery system."
The government and the central bank of Bangladesh have already built the technology infrastructure, connecting the 'first and last mile' financial inclusion with delivery of various public goods, mostly through digital payment system, the former central bank governor said.
"A virtuous cycle of innovation (in terms of products, distribution channels, and payment system), demand and trust has already been put in motion through desired regulatory framework. Now the challenge is how to leverage digitisation strategically for enhancing efficiency, reducing market gaps,and ensuring price discovery."
Dr. Rahman invited multilateral financial institution like IMF to conduct research and process documentation for understanding the impact of financial studies on macroeconomic stability and social cohesion.
"It can always partner with platforms like AFI, IFC, GPFI etc. for peer learning and help member countries to benefit from this knowledge sharing process, " he said.
Dr Rahman went on, "Since Bangladesh is currently undergoing critical transitions in the areas of urbanisation, industrialisation, demographics, and technology, which are in turn creating various social and other related tensions, the country should further enhance its drive for financial inclusion for navigating domestic and external shocks.
Dr. Rhee appreciated the former Bangladesh Bank governor for his 'out-of-box' policy interventions, not only in the arena of financial inclusion, but also for maintaining stunning macroeconomic stability in Bangladesh, during his tenure.
The two, of course, tend to be closely inter-linked, asserted Dr.Rhee.