The Basel Committee has responded to growing concerns that strict prudential standards undermine innovations that serve populations otherwise excluded from regulated finance with proposed supervisory standards designed to develop policies that not only enhance financial inclusion, but also do so without threat to the financial institutions serving non-traditional customers with new products. A major concern here is that innovative products for under-served populations are increasingly coming from non-traditional players that, due to their exemption from bank prudential and/or consumer-protection standards, pose an array of risks. These could come to be systemic if amounts involved grow or if other risk dimensions are heightened. In many venues, regulators governing banks also have jurisdiction over these non-banks or could seek it, and Basel thus lays out core principles to guide their initiatives. Basel hopes that its final standards will guide telecommunications and other regulators with jurisdiction over non-bank service providers.
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