1. Each year 150 million new consumers enter the global economy, primarily in the emerging markets. Particularly over the last decade, households across Europe, North America, Latin America and Asia have discovered a new commodity—consumer credit. Households have taken on debt to pay for housing, cars and just getting by. The Russian Federation has been no exemption.
2. Bank lending to Russian households increased from almost nothing a decade ago to 9.2 percent of Gross Domestic Product in 2008. This is an average annual increase of 84 percent a year for five years. Across Europe, this was one of the most rapid rises in consumer lending—only Romania was higher at 100 percent annual increases.
3. In just four years (from 2003 to 2007) consumer borrowings—excluding mortgages—skyrocketed from a minimal level of $100 per person in Russia to over $1,200 per capita.
4. And yet, the increases have been uneven. More than 40 percent of the Russian population still lacks access to any form of financial services.
5. Today the World Bank is releasing its draft Diagnostic Review on Consumer Protection in Financial Services in the Russian Federation. The report was prepared at the request of the Russian financial authorities and is part of the World Bank—Government of Russsia program to assist in the improvement of financial education and financial literacy in Russia.
6. The report has been extensively reviewed by the Russian authorities and professional associations. It is being released in draft form in order to be able to benefit from this week of financial consumer protection workshops. Following this week of workshops, the draft will be finalized and made available through the World Bank website.
7. In total, five workshops are planned. Today is the first workshop, which will launch the week’s discussions. Four workshops will look at the details of each part of the financial sector, banking, securities, insurance and pensions.
8. We in the World Bank were very pleased to hear that all of the professional associations for the financial sector were intersted in hosting and organizing the workshops for each of their parts of the financial sector—and that they wanted to develop plans to move forward. The World Bank strongly supports such initiatives and we are here to help—first with the diagnostic review and later we can provide advice on different options for implementation, if this would be of assistance.
9. I would also like to thank the Russian authorities and the members of the professional associations and community for their assistance. The Diagnostic Review for the Russian Federation is the ninth country diagnostic review, which is part of a pilot global program on financial consumer protection. It was also the most complex review, due to the dynamic nature of the Russian economy.
10. Your work today is also helping us in the World Bank understand the concrete issues faced when trying to improve financial consumer protection. As part of the pilot program, the World Bank has developed a set of draft good practices on what works well internationally to strengthen financial consumer protection. The work in Russia and other emerging markets has helped us to understand the key issues for financial consumer protection—and together we can find concrete and practical ways to help financial consumers.
11. As the Russian authorities continue to strengthen the financial sector, making financial services easy to understand and safe to use will be a crucial part of the foundations for future development. I look forward to this week of workshops on this important subject.
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