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This report discusses strengthening the provision of payment services in the countries of the Middle East and North Africa (MENA) region as an essential step to integrate their economies into the world of 'digital finance and digital economy' and to support economic development. The report elaborates a strategic approach to the development of sound and dynamic ecosystems for the provision of digital payment services (DPS) as foundations for effective financial digitalization and development of digital economy in MENA countries. The report is not about intervening in the MENA region through a coordinated regional strategic plan; rather, it describes what MENA countries should do to modernize their DPS ecosystems, starting from their own initial conditions. To this purpose, it identifies steps that are tailored to those initial conditions and delineates a strategic approach that national authorities may consider when designing their own strategy for modernizing DPS.

E-Finance and E-Security --- Finance and Development --- Finance and Financial Sector Development --- Financial Intermediation --- Financial Structures

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The Chinese insurance sector is experiencing rapid growth, posing particular challenges to effective supervision. The sector has been growing by over 20 percent a year and there are ambitious government targets for further development. Many individual, often newer, companies are growing at rates far in excess of the average. New entrants, products and distribution channels, combined with the liberalization of pricing, have increased competition. At the same time, slower economic growth and reduced investment returns are exposing many established life insurers to the risk of loss due to the rising value of their liabilities. Many non-life companies are moving into new lines of business as margins in established lines erode. While their customers continue to benefit from a dynamic market, there are risks to insurance companies' business models, performance and to solvency as well as risks of misconduct in the treatment of insurance customers. There are particular challenges for insurance supervisors to remain abreast of developing risks, while continuing to strengthen the regulatory and supervisory system for the longer term. The China Insurance Regulatory Commission (CIRC) has been undertaking far-reaching reforms and modernization since the 2011 FSAP. It has focused its work on improving corporate governance, enforcing sound market conduct and reshaping the solvency standards into a modern, risk-based approach. The China-Risk Oriented Solvency Standards (C-ROSS) draw on international practices and experience in the Chinese market to define solvency requirements that generally reflect risk as well as rewarding sound risk management. By linking the framework to an in-depth assessment of risk management, C-ROSS has also equipped CIRC with a strengthened overall supervisory framework for solvency risk. As a result, CIRC has felt confident to relax or remove less risk-based requirements such as new product (and reinsurance contract) approval as well as detailed limits on insurers' investments. In parallel with regulatory changes, it has been working to reform and develop the insurance market, liberalizing pricing controls and accommodating the development of new products, although restrictions remain on the access of foreign insurers, especially in life insurance.

Finance and Financial Sector Development --- Financial Intermediation --- Financial Regulation and Supervision --- Insurance and Risk Mitigation --- Insurance Law --- Law and Development

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This paper examines the financial-stability challenges that will most likely be faced by European emerging-market countries in adapting to the post-crises environment, including the new financial-stability architecture and the other remaining weaknesses revealed by the global and European crises. The paper first reviews the pre-crisis financial-stability architectures in Europe and across the globe and then identifies the key weaknesses revealed by the global crisis. It then describes the micro and macro-prudential components of the new European System of Financial Supervision and some of its design limitations (and only briefly mentions reforms designed to deal with sovereign debt problems). The paper then identifies ten key areas where there are remaining challenges of implementation and additional reforms: six areas pertaining to all countries in Europe as well as the other major financial centers and four areas more germane to emerging-market countries in Europe. In discussing these ten areas, the paper tries to differentiate the relative challenges faced by categories of emerging-market countries, and their possible links to the excessive build-up of vulnerabilities in the pre-crisis period as a potential source of lessons for policy going forward.

Banks & Banking Reform --- Currencies and Exchange Rates --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial Intermediation --- Financial regulation --- Financial stability

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This paper uses Ethiopian data to explore credit rationing in semi-formal credit markets and its effects on farmers' resource allocation and crop productivity. Credit rationing-both voluntarily and involuntarily-is found to be widespread in the sampled rural villages, largely because of risk-related factors. Political and social networks emerge as key determinants of access to credit among smallholder, peasant farmers. Significant regional variation emerges as well. In high-potential, surplus producing areas where credit is largely used for agricultural production, eliminating credit constraints is estimated to increase productivity by roughly 11 percentage points. By contrast, in low-productivity, drought prone areas where loans were rarely used to acquire inputs for crop production, the authors find no relationship between credit rationing and agricultural productivity. To be effective, efforts to improve agricultural productivity not only need to increase credit supply, but also explore the reasons for credit rationing and the availability of productive opportunities.

Access to Finance --- Agriculture --- Bankruptcy and Resolution of Financial Distress --- Credit constraints --- Credit rationing --- Crop production --- Debt Markets --- Economic Theory & Research --- Financial Intermediation --- Rural Development --- Ethiopia

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Financial infrastructure is the underlying foundation of a country's financial system. It comprises all institutions, the rules, and standards of all the systems which enable financial intermediation. The quality of a country's financial infrastructure determines the efficiency of intermediation, the ability of lenders to evaluate risk and of borrowers to obtain credit, insurance, and other financial products at competitive terms. For instance, the efficient and smooth functioning of the payment, and securities settlement systems facilitates the discharge of financial obligations and the safe transfer of funds across distances and institutions and retail customers, supporting the stability of the financial system. This technical note contains the assessment of the national payment and settlement systems (NPS) infrastructure in Russia using the framework of international standards6 and the experience and previous work of the World Bank on payment systems development7 in several countries around the world. The assessment was undertaken in the context of the IMF and World Bank (WB) joint Financial Sector Assessment Program (FSAP) mission to Russia during March 15-30, 2016. The assessor was Gynedi Srinivas of the World Bank's Payment Systems Development Group. The assessor will like to thank the counterparts in Russia for their excellent cooperation and hospitality during the mission. The technical note assesses the NPS infrastructure in Russia under four broad themes. These are: (i) Legal and regulatory framework; (ii) Payment system landscape; (iii) Systems for post-trade clearing and settlement - Central Securities Depository and settlement depository and Central counterparty; and (iv) Oversight. It does not provide a detailed assessment of individual payment and settlement systems in the form of a Report on Observance of Standards and Codes (ROSC).

Finance and Financial Sector Development --- Financial and Private Sector Development --- Financial Intermediation --- Financial Regulation & Supervision --- Financial Structures --- International Financial Standards and Systems --- Legal Framework --- Remittances