Nepal | June 26, 2019

Risky business

• BLOG SURF

Himalayan News Service

Measures to prevent criminals and terrorists from exploiting the global financial system often have unintended consequences in the form of less access to credit for small and medium-sized enterprises (SMEs) in vulnerable regions like the Pacific.

This in turn creates market gaps that undermine Pacific countries’ ability to create growth and jobs to lift people from poverty.

It’s all about banks’ capacity to detect irregular behavior in their clients. Bankers can relatively easily determine that a large company isn’t involved in crime but getting the same assurances from small businesses in the Pacific can be difficult and costly. This can also lead banks to sever correspondent ties, a trend commonly referred to as “de-risking.” There is widespread concern that many Pacific countries may be shut out of the global financial system due to de-risking, preventing their small businesses from transferring money abroad or clearing currencies…

— blog.adb.org/blogs


A version of this article appears in print on June 12, 2019 of The Himalayan Times.


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