Financial Services Volunteer Corps

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

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. 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. 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. 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. Roadblocks Today for Private NGOs • 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) • 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)

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. 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