TC Notes
Saturday, Nov 21, 2020

TC Notes

Supervisory Practices

Supervisory Practices

The Role of Supervision in the Financial Inclusion of Forcibly Displaced Persons

The worldwide total of forcibly displaced persons (FDPs) reached 110 million in 2022, with the cross-border refugee population standing at 36.4 million in 2023. The conti

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Cross-Border Supervision of Capital and Liquidity Adequacy

Cross-border supervision is one of the more challenging supervisory priorities. It adds layers of complexity, new stakeholders, and potential challenges to effective supe

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Supervisory Intervention by Retail Conduct Supervisors

The nature of retail conduct supervision, which can often be more prescriptive and rules based, can result in different approaches to intervention. This TC Note and acco

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Supervision of Stress Testing by Financial Institutions

Stress testing should be a critical element of risk management for most financial institutions. It should alert boards and senior management to potential adverse outcomes

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Supervisory Stress Testing: A Primer

Supervisory stress testing is a technique used to assess the robustness of financial institutions and the broader financial system to severe but plausible shocks. Since t

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Supervising Migrant Insurance and Pensions

Annually, the world’s 280 million migrant workers send USD 1 trillion to 800 million family members. This TC Note and podcast explains why insurance and pensions for th

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Regulation and Supervision of Retail Payment Systems

This TC Note and accompanying podcast examine the regulation and supervision of retail payment systems (RPS). RPS provide advantages such as innovation, but also presen

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Financial Literacy and Digital Financial Inclusion: Supervisory Policy and Practice

Listen to the Podcast Financial Literacy has been recognized as a critical driver for financial inclusion and has become an integral part of many countries' financial in

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Supervision of Bank Model Risk Management

July 2021 This Toronto Centre Note discusses the supervision of model risk management by bank supervisors.  Introduction[1] Banks use models to inform business decisi

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Operational Resilience: The Next Frontier for Supervisors?

Introduction[1] Operational resilience can be described as an outcome in which the continuity of the key business services provided by supervised financial institutions

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Integrating Microprudential Supervision with Macroprudential Policy

Introduction[1] The purpose of this Toronto Centre Note is to explain why the macro and microprudential approaches and disciplines have to be integrated for the effectiv

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IFRS 17 Insurance Contracts - What Supervisors Need to Know - Updated

Updated November 2020 Introduction[1]  After 20 years in development, the International Accounting Standards Board[2] issued a new Insurance Accounting Standard, IFRS

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Supervision of Money Laundering and Terrorist Financing - Revised 2020

MONITORING COMPLIANCE BY FINANCIAL INSTITUTIONS WITH THEIR AML/CFT OBLIGATIONS UPDATED OCTOBER 2020 Introduction[1] This Toronto Centre Note provides guidance for the

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Recovery Planning

Introduction[1] Recovery planning is not an entirely new concept – financial institutions have always had contingency plans to enable them to respond to, and recover f

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HOW SUPERVISORS CAN IMPROVE THE EFFECTIVENESS OF FINANCIAL EDUCATION

Introduction and summary[1] This Toronto Centre Note sets out how supervisors can improve the effectiveness of financial education and literacy initiatives to improve co

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Pillar 2 and Beyond: Issues for Supervisors in Implementing Basel II and Basel III

Introduction[1] Many banking supervisory authorities in emerging economies are in the process of transitioning from Basel I to Basel II or Basel III. To a large extent

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Supervisory Responses to Retail Misconduct

Introduction[1] Recurring retail misconduct across all sectors of financial intermediation globally has cost billions in compensating consumers and enforcement penalties

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The Post-Crisis Challenges Facing Supervisors

Introduction[1] This Note discusses how emerging markets should approach the implementation of the post-crisis and other recent regulatory reforms into their national fi

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Managing the People Aspects of Supervisory Change

Introduction[1] Overview This Supervisory Guidance Note (“SGN”) is designed help managers in supervisory agencies improve the likelihood of successfully managing ch

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How Can a Supervisor Manage Outside Experts?

Introduction[1] As a financial sector supervisor, you continually face a wide range of challenges, both large and small. Typically, supervisory institutions have suffici

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How Can Outside Experts Help a Supervisor?

Introduction[1] As a financial sector supervisor, you continually face a wide range of challenges, both large and small. Typically, supervisory institutions have suffici

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Credit Reviews by Supervisors

Introduction[1] This Guideline discusses the processes and techniques to review banks’ credit risk activities during ordinary times. It suggests a business cycle appro

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Conduct: Prevention, Detection and Deterrence of Abuses by Financial Institutions

Introduction[1] The term “conduct” refers to how providers of financial services to customers and others who participate in the financial markets as issuers, brokers

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Group-Wide Consolidated Supervision in Bank and Financial Groups

Introduction[1] What is Group-Wide Consolidated Supervision? Group-wide consolidated supervision is a comprehensive approach to evaluate the strength of an entire group

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Organizational Alternatives for Supervisors

Introduction[1] Financial supervisors can be responsible for meeting a wide range of supervisory objectives. Their objectives might be prudential in nature, such as miti

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Conflicts of Interest in Financial Services: Tumbling Down the Rabbit Hole

"This is your last chance. After this, there is no turning back. You take the blue pill -- the story ends, you wake up in your bed and believe whatever you want to beli

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Loan Classification & Loss Provisioning: A Primer

Introduction[1] This supervisory guidance note sets out, in summary form, sound internationally accepted banking practices related to loan classification and provisionin

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Action Planning Guide

Overview[1] Strong regulatory and supervisory agencies contribute to financial stability and greater access to financial services. But building such agencies – with th

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Creating an Investor Compensation Fund

Objectives for Creating an Investor Compensation Fund[1] Consideration of creating an investor compensation fund often begins with a public policy objective, such as “

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Implementing an Action Plan

Overview[1] As a financial sector supervisor, you continually face a wide range of challenges, both large and small. For all but the smallest challenges, an important fi

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Decision Making

Overview[1] “Nothing is more difficult, and therefore more precious, than to be able to decide.” – Napoleon Bonaparte Decision-making is a key role for any leade

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Policyholder Protection Plans

Overview[1] The fundamental objective of a policyholder protection plan (PPP) is to reduce the adverse effects on policyholders and third-party claimants of the inabilit

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Increasing Investor and Shareholder Engagement

Overview[1] As a financial sector supervisor, you are faced with the continual challenge of administering your regulatory framework with investor and shareholder perspec

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Leadership and Governance

Leadership and Governance

Supervising Corporate Governance: Pushing the Boundaries

Listen to the Podcast This TC Note and the accompanying podcast explores the reasons why there is insufficient attention to the supervision of corporate governance. Prac

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Supervising Corporate Governance During Crises

Introduction[1] Strong corporate governance in regulated firms is important at all times, to provide strategic direction and to ensure that risks are properly managed.

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Assessing the Suitability of Key Individuals in Financial Institutions

Introduction[1] This note explains: the key principles relating to the suitability[2] of key individuals[3] in a regulated financial institution[4]; why it is import

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Improving Corporate Governance in Regulated Firms

Introduction[1] This note explains: the key principles of corporate governance within a regulated financial services firm why it is important for supervisors to asse

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Crisis Management

Crisis Management

Lessons for Supervisory Authorities from Crisis Simulation Exercises

Listen to the Podcast Financial crises are expensive, not only in terms of lost income and wealth but also because of their negative impact on financial inclusion and ge

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Guide to Supervision in the COVID-19 World

Foreword Toronto Centre is pleased to publish this Guide to Supervision in the COVID-19 World. This Guide focuses not only on the current challenges – adjusting to su

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Exit Policy: Taking Supervisory Action to Deal with Non-Viable Financial Institutions

Introduction[1] International standards provide financial supervisors with a wide-ranging set of principles that offer guidance across virtually all areas of supervisory

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Resolution: Implications for Supervisors

Introduction[1] The global financial crisis (GFC) demonstrated the limited options available at that time to the authorities in dealing with failed (or failing) systemic

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THE COVID-19 PANDEMIC: SUPERVISORY IMPLICATIONS AND PRIORITIES FOR ISLAMIC BANKING

Introduction[1] The COVID-19 outbreak continues to wreak havoc on economies across the globe. It has plunged the world into recession and made economic recoveries a daun

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Supervisory Responses to the Impact of COVID-19 on Credit Quality

Introduction[1] The COVID-19 outbreak has had a sharp negative impact on economies worldwide. This in turn has had a significant adverse impact on credit quality, not o

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BUSINESS CONTINUITY PLANNING FOR A SUPERVISORY AUTHORITY

Introduction[1] Organizations need to anticipate unexpected incidents and plan how they are going to respond to them. This is not forecasting what will happen, nor calcu

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Ten Issues for Supervisors During Crises

Introduction[1] The COVID-19 crisis is creating unprecedented pressures on both supervisory authorities and supervised firms. Supervisors everywhere are being forced to

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Designing and Implementing a Systemic Financial Crisis Management Simulations

Introduction[1] Toronto Centre (TC) began running financial crisis management simulations (FCMS) in 2008 as part of its courses on financial crisis management. These sim

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Coronavirus and the financial sector – implications for supervisors

Webcast – Discussion Note March 2020 This briefing note sets out some issues for discussion on the response of financial sector supervisors to the coronavirus pandemi

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Crisis Binder: An Essential Tool for Crisis Preparedness

OCTOBER 2019 Introduction[1]  A crisis binder is an essential tool to enhance crisis preparedness. It is a comprehensive compilation of strategic information on crisis

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Contingency Planning for Bank Resolution and Financial Crises

Introduction[1] This note provides basic guidance for senior managers of supervisory agencies in making contingency plans to deal with banking or financial system distre

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Risk-Based Supervision

Risk-Based Supervision

The Risk-Based Supervision of Liquidity

Liquidity is fundamental to the operation of financial institutions. Problems can quickly arise and escalate, threatening the stability of the financial system. This TC

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Risk-Based Supervision: Some Practical Implementation Issues

This TC Note and podcast address issues encountered by introducing risk-based supervision. These range from technical matters to more complex challenges, such as: appr

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Drivers of External and Inherent Risks in Risk Based Supervision

This TC Note and accompanying podcast provides useful background on issues to be considered in assessing risk when guidance does not exist. Read their biographies. Read

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Risk-Based Supervision of Retail Conduct

This Toronto Centre Note and accompanying podcast focus on the use of a risk-based approach to retail conduct supervision. It also addresses the challenges of supervising

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RISK-BASED SUPERVISION OF CROSS BORDER GROUPS

DECEMBER 2021 INTRODUCTION[1] Toronto Centre has consistently promoted risk-based supervision (RBS) as the most efficient and effective approach for financial superviso

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Risk-Based Supervision for Securities Supervisors (and Other Supervisors of Small Firms)

Introduction[1] The purpose of this Note is to help securities supervisors to develop and implement a risk-based, forward-looking and proactive approach to supervision

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The Development and Use of Risk-Based Assessment Frameworks

Introduction[1]                                                           This Toronto Centre Note is the thir

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Implementing Risk-Based Supervision: A Guide for Senior Managers

Introduction [1] Toronto Centre has been in the forefront of promoting risk-based approaches to supervision (RBS).  The rationale for RBS and many of the technical issu

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Risk-Based Supervision

Introduction[1] Even in jurisdictions with relatively simple financial systems, there can be a large number of firms of different sizes undertaking a range of activities

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Enterprise Risk Management for Insurers

Overview[1] Enterprise risk management (ERM) is a critical pillar of corporate governance. It is a holistic approach to risk management that takes into account the corre

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Turning Risk Assessments into Supervisory Actions

Introduction and Overview[1] This is the fourth in a series of Toronto Centre Notes on the subject of Risk Based Supervision (RBS).  The first set out the principles o

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Financial Technology

Financial Technology

Supervising Fintech

This TC Note is the compilation of the winning submissions from our essay competition. It examines the supervision and regulation of different types of fintech entities.

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Cyber Risk - Determining and Delivering a Supervisory Strategy

This TC Note and accompanying podcast address the rapid rise of cyber risk, which presents unique challenges to the financial sector. They provide guidance on how to det

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Central Bank Digital Currencies: Implications for Supervisors

This TC Note and accompanying podcast will examine the implications for supervisors regarding the usage of digital currencies by central banks. Speaker: Clive Briault,

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Supervisory Implications of Artificial Intelligence and Machine Learning

This Toronto Centre Note and accompanying podcast describe how financial institutions are using artificial intelligence (AI) and machine learning (ML), and how supervisor

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Using Suptech To Improve Supervision

NOVEMBER 2021 ESSAY WINNERS 2021 Preface This summer, Toronto Centre accepted submissions for an essay contest in which participants were asked to describe how superv

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CLOUD COMPUTING: ISSUES FOR SUPERVISORS

Introduction[1] In recent years, financial institutions in both advanced economies and emerging markets and developing economies (EMDEs) have increasingly been adopting

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SUPERVISING FINTECH TO PROMOTE FINANCIAL INCLUSION

Introduction[1] This Toronto Centre Note discusses how financial regulation and supervision can enhance the benefits of fintech[2] for financial inclusion and gender equ

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SupTech: Leveraging Technology for Better Supervision

Introduction[1] Technological innovation is revolutionizing the financial services industry and is poised to transform financial supervision as well. There are at least

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Supervision of Cyber Risk

Introduction[1]   “Cyber Risk” in context of the financial services sector refers to the operational risks that may result in loss of confidentiality, integrity an

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Regulatory Sandboxes

Introduction[1] The speed and the diversity of global financial innovation have accelerated in the past few years, often spurred by technological developments and the ri

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FinTech, RegTech and SupTech: What They Mean for Financial Supervision

Introduction[1] The global financial crisis that began in 2007 has triggered a comprehensive reform of the financial regulatory architecture, as well as a profound rethi

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Sustainable Development

Sustainable Development

The New ISSB Standards: Considerations for Financial Supervisors

The International Sustainability Standards Board (ISSB) has developed new standards for sustainability reporting and climate-related disclosure. This new TC Note and acc

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Supervising Inclusive Financial Sectors

This TC Note and podcast brings together principles and practices related to financial sector oversight that are relevant to financial inclusion, including proportionate

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Food Security: Implications for Supervisors

This TC Note and accompanying podcast discuss the food security issue, which is relevant to supervisory objectives such as institutional soundness and the maintenance of

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Introduction for Supervisors to Scenarios and Stress Tests of Climate Change Risks

This TC Note and accompanying podcast provide a detailed background on climate scenarios and practical guidance on the design of climate stress tests. Supervisors will ga

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A Climate and Biodiversity Risks Toolkit for Financial Supervisors - 2023 Update

Climate and biodiversity-related risks to financial institutions, financial stability, investors, and financial inclusion are increasing. These risks are therefore becomi

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HOW CAN CLIMATE-RELATED RISKS BE INTEGRATED INTO RISK-BASED SUPERVISION?

    Preface   This summer, Toronto Centre accepted submissions for an essay contest in which participants were asked to describe how climate-related risks can be i

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Adapting Macroprudential Frameworks to Climate Change Risks

Listen to the Podcast Microprudential authorities are beginning to take climate-related risks into account and to reflect them as part of their supervisory principles an

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HOW REGULATORS USE SEX-DISAGGREGATED DATA AND REGTECH TO ENHANCE FINANCIAL INCLUSION

Executive summary Financial inclusion of women brings disproportionate benefits to their families and to economic development, yet in many countries an access-to-finance

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Climate Change: Issues for Securities Supervisors

Introduction[1] Climate change impacts are already being felt and are forecast to increase. Since the 2015 Paris Agreement (United Nations 2015) to limit global warming,

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Blended Finance: Implications for Supervisors

Introduction[1] Blended finance is the practice of using international development grant funding to encourage international and domestic private investment in projects t

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HOW HAS SUPERVISION RESPONDED TO CLIMATE CHANGE-RELATED FINANCIAL RISKS?

Introduction[1] “Climate change is a defining issue of our time and we find ourselves at a defining moment. From shifting weather patterns that threaten food productio

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STRESS TESTING AND CLIMATE CHANGE

Introduction[1] Climate change poses significant risks. It is essential that both financial sector supervisors and the organizations they supervise understand the risks

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WHAT ROLE CAN FINANCIAL SUPERVISORS AND REGULATORS PLAY IN PROMOTING GENDER EQUALITY AND THE ECONOMIC EMPOWERMENT OF WOMEN?

Introduction This summer, Toronto Centre accepted submissions for an essay contest in which participants were asked to make an argument and action plan for the role that

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CLIMATE CHANGE: ISSUES FOR BANKING SUPERVISORS

Introduction[1] Climate change is becoming an increasingly important issue. Global average temperatures have risen by more than 1⁰C since the late 1800s. This upward t

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HOW CAN SUPERVISORY AUTHORITIES CONTRIBUTE TO MEETING THE UN SDGs?

CLIMATE CHANGE, FINANCIAL INCLUSION AND GENDER EQUALITY Introduction[1] There is a growing international consensus on the importance of climate change, financial inclus

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SUSTAINABLE FINANCE AND INVESTING WITH IMPACT: IMPLICATIONS FOR EMERGING MARKET FINANCE

Introduction[1] The Sustainable Development Goals (SDGs) have given new drive and focus to sustainable finance and investing with impact. They create an ambitious agenda

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Advancing Women’s Digital Financial Inclusion

Introduction[1] Women’s inclusion in the usage of financial series is broadly recognized as a key driver of women’s participation in the economy and of household wel

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Financial Literacy

Introduction[1] Financial literacy is “a combination of financial awareness, knowledge, skills, attitude and behaviours necessary to make sound financial decisions and

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Climate Change

Introduction[1] Climate change is occurring and it poses significant risks. Overall, the world has been getting warmer, which most scientists agree is because of carbon

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The Business Case for Promoting Improved Gender Balance in Financial Institutions

Introduction[1] A growing number of countries are adopting measures to promote an increase in women’s representation on corporate boards and in senior executive roles.

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REMOVING THE BARRIERS TO WOMEN’S FINANCIAL INCLUSION

Introduction and Overview[1]   In recent years, the term financial inclusion has become increasingly associated with digital financial services, and more particularly

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