ADB's Work in the Finance Sector
The Midterm Review of the Financial Sector Operational Plan makes recommendations up to 2020 and provides a platform to launch ADB's Financial Sector Operational Plan beyond 2020 to ensure its relevance with ADB’s Strategy 2030.
It is essential that countries in Asia and the Pacific develop their finance sectors to encourage strong and stable economic growth that is inclusive and, thus, reduces poverty. An effective finance sector will help generate funding for private and public investments, promote savings, improve resource allocation, and facilitate the diversification and management of risks.
Indeed, deep, liquid, and well-regulated financial systems enhance financial stability and help mobilize resources for gestating the mid- and long-term investments that developing societies depend on. Asia and the Pacific, specifically, need more advanced finance to help fund now well-publicized gaps in infrastructure that are hindering development. Greater access to formal financial services, meanwhile, can help raise productivity and incomes and, likewise, reduce poverty.
ADB’s Financial Sector Operational Plan (FSOP) of 2011 articulates and guides the organization’s implementation of its finance sector development agenda through 2020. A mid-term review of that plan, completed in 2016, affirms an operational focus on the finance sector that highlights three key themes touching on each of the areas discussed above: finance sector development, inclusive finance, and infrastructure finance:
- Finance sector development, the mainstay of finance sector operations, includes developing diverse, efficient, and stable financial markets, institutions, and systems.
- Inclusive finance, which has the greatest impact on poverty alleviation, will deliver affordable financial services to low-income households and to small businesses and create a financial sector that provides access to everyone.
- Infrastructure finance, which complements ADB’s major business line and includes facilitating the efficient allocation of long-term finance to meet financing needs for infrastructure.
The review recommends measures to calibrate a response under these three key themes to increase and strengthen finance sector operations and its subsequent impact on all other sectors, industries, and economic activities.
It also calls for stronger capabilities and skills among ADB staff, and additional resources in operational areas of focus, including emerging and innovative areas such as digital, green, and disaster risk finance. Emphasis on these areas is a recognition of the demand in ADB’s developing member countries for increasingly multidimensional and complex sector support.