1. 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. 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. 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

4. 4 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. 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

6. 6 What can a private Global Corps of Financial Experts Help with?

7. 7 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. 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)

9. 9 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

10. 10 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.

11. 11 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)

12. 12 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

13. 13 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