Skip to main content

On a recent World Council of Credit Unions webinar leading up to the G20 conference in Rome, Italy, CUNA’s Executive Vice President and Chief Advocacy Officer Ryan Donovan offered a reminder to credit union executives why understanding the policymakers at the G20 was so important. What happens at the G20 is not irrelevant to credit unions in the United States; it provides an opportunity for policymakers to understand the needs of credit unions and the members who depend on them. 

“One of the core principles of advocacy is finding out how the information we have as advocates can play in the decision-making process, how (we are) relevant to them,” Donovan explained. “That’s part of what we’re trying to do before G20, to show how much these standards impact us. That’s why (the) G20 language on financial inclusion and proportionality is important. It really represents (the) global community coming together to say that one-size-fits-all regulation is counter-productive to financial inclusion.”

“The more we can get these international standard-setters — in this case the G20 — endorsing this proportionality idea, the better chance we’re going to have that our regulators and lawmakers implement proportional regulations.”

Such ideas lay the foundation for why the recent conference on October 30-31 was so critical, especially in these tempestuous times. The gathering offered an opportunity for the world’s credit unions to come together and show how big the CU movement really is, in part, by how they can guide the least stable, most vulnerable members to financial inclusion and improved wellness.

Formally, the G20 is an intergovernmental forum comprising 19 countries and the European Union that work to address major issues related to the global economy. (CUToday) Those individual countries’ economies account for over 90 percent of the gross world product. 

American credit unions — similar to their counterparts around the world — are significantly different from large international banks and should be regulated as such, said Donovan. 

This is where proportionality comes in. 

The World Council of Credit Unions’ Greg Newman (introducing WOCCU President and CEO Elissa McCarter LaBorde, above) leads the organization’s webinar event discussing how the international credit union movement is urging the G20 to focus on the importance of proportionality as a way to increase financial inclusion across the globe. | VIDEO: WOCCU

Proportionality: People helping people where they are

According to the Credit Union National Association (CUNA), proportionality allows national-level regulators to tailor rules often designed for large, internationally-active banks to allow local, community-based financial institutions to operate. Earlier this year, CUNA and the World Council of Credit Unions (WOCCU) wrote to Treasury Secretary Janet Yellen urging her to call on the G20 to include language in its Leaders’ Declaration that proportionality is essential to increase financial inclusion. 

The two credit union organizations contended that it was essential that national regulators work with international standard setting bodies to fully adopt proportional tailoring of regulations. “The link between proportionality and financial inclusion has been well-studied and documented as it allows the expansion of a financial institution’s ability to serve people outside the financial system,” the letter said. Additionally, CUNA and WOCCU said they “support the G20’s commitment to financial inclusion”,  establishing their mission to support credit unions around the world was “directly aligned with the G20’s objective to reduce inequalities and promote inclusive growth.”

The letter goes on to say that while international standard setting bodies have welcomed proportionality, “more effort and discussion need to occur regarding how day-to-day supervision at the national level should be tailored to reflect the systemic importance, complexity, and risk profile of regulated entities.”

The proof is in the pudding for credit unions

Credit unions can be the perfect example for introducing proportionality to smaller, community-based financial institutions. All it takes is credit unions “showing their work” that is critical to advocacy success, as Ryan Donovan stated in remarks at a CUNA Governmental Affairs Conference earlier this year. He added that credit unions maintain an important role in assisting Americans, so when they put their work and results on display, the policymakers listen.

“The work you do to improve your members’ financial well-being and advance the communities you serve makes our advocacy progress possible. It helps advance our system’s agenda, and frankly, made the work of executing our 360-degree advocacy strategy that much easier,” Donovan continued. “But we face challenges ahead and we need to redouble our efforts to tell the story and show our impact. We need to maintain progress and take advantage of opportunities to advance our agenda in a fundamentally different political environment.”

Proportionality, if applied appropriately, can significantly advance the G20’s goals of promoting financial inclusion by fostering responsible finance through increased access to affordable financial services.
Photo: Official Monetary and Financial Institutions Forum

Getting policymakers’ attention for the sake of financial inclusion

It is one thing to proclaim to the world on a global stage like the G20, and it’s another thing to see those proportionality and financial inclusion policies come to fruition on the homefront. In the WOCCU webinar, Ryan Donovan got honest about policymakers and regulators’ motivations for improving financial inclusion measures for our nation’s  credit union communities. “One of the core principles of advocacy is really understanding your audience, and when you’re working with policymakers that means understanding what keeps them up at night, and how the information that we have as advocates can play in their decisioning, “ he said. “In other words, how are you relevant to them? A key question is, ‘Do they care,’ but really the question is what do they care about.

This is the point where the global stage plays its part. “I think this is why it’s important to have (the) World Council advocate for us at the global level,” Donovan continues. “That’s why it’s important for World Council members to come together and take the message directly to the standard-setters and policymakers. In essence, we must come together as an international credit union community and make ourselves appear big enough for them to notice, but still small enough that perhaps we cannot be impacted by their regulation.

“Tthe G20 language on financial inclusion proportionality is important. It really represents the global community coming together to endorse the idea that one-size-fits-all regulations are counter-productive to financial inclusion, and the more that we can get international standard-setters — in this case, the G20, which is representative of many of our governments — the more we can get them endorsing this proportionality idea. There is a better chance that our regulators and our lawmakers will implement proportional regulation.”

What is your take on the concept and application of proportionality, and its implementation into the U.S. credit union movement? Tell us in the comments below, or connect with us on the socials @QCashFinancial!