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23/1/2019  
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Financial inclusion

Treat equals equally


A decade ago, we started to talk about positive discrimination in social spheres, addressing the need to treat people differently based on their roots, favoring those who begin the race behind the start line, something that usually goes together with facing an actual obstacle course.
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Along with this rationale, we started to replace the word equality with equity, which is a term originally linked to the required women empowerment processes.

In the case of legal persons, within the business landscape, we find in parallel another interesting logic: there are enterprises (currently known as social) that provide more social value than the rest. We refer to those which prioritize certain objectives other than revenues, such as territorial cohesion, integration, environmental respect, etc… in other words, they generate positive outcomes whose benefits must be also quantified.

In fact, this new concept has been implemented in the socially more advanced economies, leading to social and environmental terms being incorporated to public tenders. The Netherlands is a good example of this new paradigm.

Now, I offer you to recall the “positive discrimination” and “social value” concepts in order to introduce them in the debate about the new regulation of the financial system.

According to the new economic literature, the banking sector’s prime mission is the funding of the so called real economy (vs. the speculative). Particularly, it must fulfill its brokering function between the savings and the investments, facilitating the financial inclusion along this way. We should hence recognize those financial agents that facilitate the access to credit to the population in a poor financial situation or SMEs with low resources. This would be very well in line with the positive discrimination concept.

However, we also find entities that not only locate their offices with opportunistic criteria, but also take into consideration the needs of the different territories and hence perform a balanced spread of their territorial network, thus contributing to boost local economies.

Now it’s your turn to determine who I may refer to when I bring forward these scenarios: the large banking companies or the corporate banking? If you agree that I refer to the latter, you may wonder why the European Commission is so adamant in supporting equal rules for everybody, when the actions are very far from being equal.

I was having this debate in the course of an event organized by the European Association of Co-operative Banks (EACB) and sponsored by the European Economic and Social Committee (EESC), advisory body where I develop a great part of my professional activity.
Given this unreasonable “one-size-fits-all” attitude, I allowed myself to raise the following reflections, all of them endorsed by statements from the Committee by means of various opinions:
  • The access to the credit (both in quantity and in price) is more difficult for small banking entities, such as cooperatives. They also find it complicated to manage the intermediation of the European Investment Bank (EIB) financial instruments. Shouldn’t we pave the way for those financial agents?
  • The increase of equity (strengthening the solvency) is more costly for non-capitalist enterprises, since they have no access to secondary markets, which are very developed in other cases. Should we allow greater flexibility in solvency and liquidity requirements?
  • And what about those banks that borrow money from the ECB at 0,25% interest rate and, rather than employing it for loans, they use it in profitable operations of government bonds purchases? Shouldn’t we track down the application of such funds?
And we can’t end this succinct reflection without wondering what financial agents have contributed more to force us to play in this new scenario: those who had to be rescued with taxpayers’ money because they recklessly abandoned their assigned function and undertook speculative and short-termed adventures? Or rather those who worked away from financial speculation and acted upon ethic codes inspired in cooperative values and principles?

We should therefore, my dear European Commission, treat equals equally.



Carlos Trias Pintó
Member of the EESC and director of ASGECO

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