CONVERGENCE

THE RETAIL DEPOSIT CASE STUDY

Rumyana — 2010-02-24T09:54:24Z

The retail deposit case study, prepared by the Italian Banking Association, shows the power of a systematic approach to identify possible regulatory interventions through the following analytical levers, explored in cascading sequence: a) Five types of market failure; b) Remedial actions through three channels (supply, demand or market infrastructure); c) Examples of various channel-specific legislative or regulatory initiatives; d) Illustrative technical content of each legislative or regulatory initiative.

FUNCTIONS

Rumyana — 2010-02-17T16:29:23Z

Consistent with its mandate to catalyze domestic public-private collaboration, the bulk of the experts mobilized by the Convergence Program had a strong management profile. Large-scale and sustainable impact opportunities are created through operational leverage built around key professionals with capabilities to organize and aggregate work done by large teams. The initial Management Team had an unusually senior profile, which was necessary to meet the implementation challenges of an innovative approach.

Convergence Program hired few technical experts to fill the knowledge gaps of local working teams with international experience.

In all instances, Convergence Program paid close attention to defining specific responsibilities and deliverables of its experts to fulfill its fiduciary duties to its clients and financiers.

Regional Management
Convergence Program Management Launch Arrangements
Country Senior Advisor; Senior Advisor (Market Participants)
Convergence Program Deputy Head
Convergence Program Acting Deputy Head
SPI Regional Operations Director
Convergence Program Operations Management
Study on Italian Banking Association
Financial Modernization Search Engine
SPI Platform Toolkit

Country Management
SPI Albania Build-Up
SPI Platform Support Services
Senior Country Advisor; SPI Platform Senior Advisor
SPI Albania General Manager
Director of Analytics and Policy
Director Modernization Program and Analytics
Director of Operations
SPI Secretariat Modernization Program Consultants
Director of Banking Products and Services
Head of Serbia Financial Sector Guillotine Secretariat
SPI Banking Sector Anchor
SPI Romania Transition Arrangements Management; Legal Analysis

Technical
Romania Deposit Guarantee Fund Analytical Team;Peer Reviewer
Regional Supervisory Coordination Project; Seminar; Market Participant Survey
Italy-Albania Remittances Leader;Co-Leader;Research Assistant;Main Analyst;Second Analyst
Croatia Securitization Independent Reviewer; Personal Legal Advisor;Local Representative
Regulatory Impact Assessment Seminar Team Validation; Regional Seminar Instructor; Tirana Seminar Instructor
Rural Lending in Romania
IFRS Loan Loss Treatment

Administrative
Convergence Program Office Manager
Web Design
Editorial Assistance
SPI Romania Office Assistance

CONVERGENCE STAFF ToRs

Rumyana — 2010-02-12T16:25:00Z

Convergence Program hired few technical experts to fill the knowledge gaps of local working teams with international experience.

In all instances, Convergence Program paid close attention to defining specific responsibilities and deliverables of its experts to fulfill its fiduciary duties to its clients and financiers.

Regional Management
Convergence Program Management Launch Arrangements
Country Senior Advisor; Senior Advisor (Market Participants)
Convergence Program Deputy Head
Convergence Program Acting Deputy Head
SPI Regional Operations Director
Convergence Program Operations Management
Study on Italian Banking Association
Financial Modernization Search Engine
SPI Platform Toolkit

Country Management
SPI Albania Build-Up
SPI Platform Support Services
Senior Country Advisor; SPI Platform Senior Advisor
SPI Albania General Manager
Director of Analytics and Policy
Director Modernization Program and Analytics
SPI Secretariat Modernization Program Consultants
Director of Banking Products and Services
Head of Serbia Financial Sector Guillotine Secretariat
SPI Banking Sector Anchor
SPI Romania Transition Arrangements Management; Legal Analysis

Technical
Romania Deposit Guarantee Fund Analytical Team;Peer Reviewer
Regional Supervisory Coordination Project; Seminar; Market Participant Survey
Italy-Albania Remittances Leader;Co-Leader;Research Assistant
Croatia Securitization Independent Reviewer; Personal Legal Advisor;Local Representative
Main Analyst;Second Analyst
Regulatory Impact Assessment Seminar Team Validation; Regional Seminar Instructor; Tirana Seminar Instructor
Rural Lending in Romania
IFRS Loan Loss Treatment

Administrative
Convergence Program Office Manager
Web Design
Editorial Assistance
SPI Romania Office Assistance

SPI PLATFORMS

Rumyana — 2010-02-08T11:26:07Z

The SPI Albania and SPI Romania websites have a wealth of information on the day-to-day activities of an SPI Platform. Readers are invited to browse the News section for a quick overview of the activities, before exploring the governance page (SPI Committee) and the project pages.

SPI ROMANIA (2006-2008)	SPI ALBANIA (2008-2010)

Photo Gallery

Rumyana — 2009-10-20T09:13:13Z

In Progress Test Page - articles out of menu

introduction

Jean — 2009-10-13T09:36:16Z

“The Convergence Program approach goes a long way to building the climate of cooperation and trust among authorities and with the business community”
National Bank of Romania

“I believe that the approach that has taken Convergence to support local public-private partnerships for financial sector reform is a very appropriate one for our country's stage of development and deserves all the support that it needs in order to accomplish its mandate”
Ministry of Public Finance, Romania

“The Convergence Program approach, which places significant importance on the collaboration among country and regional stakeholders, is the most appropriate one to support Albania's modernization needs”
Bank of Albania and Association of Albanian Banks

“The Convergence Program's SPI Platform is an effective instrument to accelerate financial modernization through structured public-private cooperation, particularly in the context of candidate and other countries in Eastern Europe.”
European Banking Federation

“The approach will greatly enforce the quality and power of work which will lead to the design of the securitization framework in compliance with EU standards”
Ministry of Finance, Croatia

“Our conviction is that the Regulatory Impact Assessment (RIA) Knowledge Transfer Program offered by the Convergence Program was an excellent means to improve the staff qualifications and skills in the field of financial services regulations drafting”
Financial Supervision Commission, Bulgaria

FAQ

Rumyana — 2009-10-02T13:23:51Z

1. Why is financial modernization important?
Financial modernization, through its interventions to improve the market outcomes of financial intermediation, makes the benefits of a strong and stable financial sector accessible to all its potential users, be they companies or households. In other terms, financial modernization distributes the dividends of financial stability to the population at large. It helps fulfill the promise of “finance for growth and equity”.

2. How does financial modernization relate to financial stability?

A 2006 speech by the European Central Bank Vice President explores at length the interface between financial stability and financial efficiency, recognizing their interrelationship and specific angles. An influential World Bank policy research paper published in 2006 argued to embrace financial efficiency considerations, pointing out that “the emerging policy issues in Latin America have much less to do with financial stability and convergence towards international standards and codes, and much more to with completing financial markets in small economies in the context of globalization”. Its conclusion was that “the dominant policy paradigm is ill-suited to provide guidance vis-a-vis the big emerging issues. We emphasize the need to take a fresh look at the evidence, improve the diagnoses, revisit expectations, and revise the paradigm”.

3. Why is financial modernization so challenging to pursue?

While pursuit of financial stability is facilitated by well-developed “standards and codes” prepared by the international financial regulatory community which focus on a small set of key prudential parameters, financial modernization embraces a very large range of potential interventions that make the interface between supply and demand of financial services smoother. It requires profound and detailed understanding of how markets work (and how they are likely to react to new regulations) and intense coordination among a plurality of stakeholders, including various line ministries and Parliaments, to identify the most appropriate policy intervention, to prepare a feasible recommendation and finally to enact market-building reforms.

Former Vice Chairman of the Federal Reserve Board Roger Ferguson argued in a March 2006 speech for “a middle ground in which markets are allowed to work and develop and in which policymakers work hard to understand new developments and to help market participants see the need for improvements where appropriate”.

4. Why is a public-private partnership necessary for financial sector modernization? What are its risks and benefits?

Successfully tackling market frictions requires a detailed technical understanding that market participants are uniquely positioned to provide to authorities – hence the idea of a public-private partnership for financial modernization. But there is another important angle to the partnership: it is the matter of the sheer volume of market frictions that need to be fixed to improve market outcomes. Only through “safe” outsourcing of preliminary analytical and reform option identification to the private sector, can a usually overstretched public sector process the large number of regulatory and legislative changes that are necessary to make markets work better. The public-private partnership, therefore, helps also to deal with the issue of the “volume” of reforms – in addition to the issue of “quality” of reforms, if it is supported by an efficient Technical Secretariat, as experimented by the Convergence Program.

The risks of a public-private partnership are those, well-known, of capture on one hand and of lack of reform follow-through on the other hand. This only magnifies the importance of the “operator”, or Technical Secretariat, of the public-private partnership.

5. What is the rationale for official institutions to catalyze public-private cooperation?

The President of the European Central Bank, Mr. Trichet, articulated the case for public sector catalytic intervention as one reacting to coordination difficulties by market participants: “Responsibility for promoting financial integration chiefly lies with financial institutions themselves which should exploit the framework promoted by public authorities. This is also dependent on the ability of the financial industry to coordinate its members effectively. We see the fostering of collective action on the part of the private sector to overcome possible coordination problems as a very important contribution by public authorities”. In many emerging and developing countries, coordination mechanisms within the private sector and between the latter and authorities have considerable room for improvement.

6. Why was the Convergence Program needed to catalyze financial modernization?

Two years of extensive discussions with both authorities and market participants in South-East Europe and careful assessment of local reform dynamics led to the overwhelming conclusion that country stakeholders did not have the coordination capabilities, analytical methodologies and enactment support discipline to inject energy into a sustainable financial modernization program – and that they sincerely wished they would acquire them.

7. Are there other examples of financial modernization catalysts?

As mentioned earlier, in the European Union the European Central Bank sees as part of its mandate to catalyze both private sector coordination and public-private cooperation to reap efficiency gains from the Single Financial Market. However, in other jurisdictions there is less clarity about relevance and feasibility of this role, even if potential benefits from fulfilling this function would be considerable. The Convergence Program represents therefore an innovative attempt to structure role and functions of a financial modernization catalyst for countries whose financial modernization opportunities are left significantly unattended because of coordination and cooperation failures.

8. Should SPI Platforms be promoted by the international community?

Prevailing institutional arrangements in many emerging, developing and transition countries make it difficult to pursue financial modernization in a systematic fashion and at a scale that is commensurate with its potential benefits for the economy. The case for a catalyst is overwhelming, as in the EU with the ECB. Whether the international public and business community plays a direct catalyst role or helps a local institution emerge as a catalyst depends on country circumstances, the fact remains that international expertise and funding support can deliver very large public gains in addressing the following challenges: a) To break public-private coordination and cooperation failure that hold back efforts to increase financial intermediation efficiency; b) To create a domestic institution with the single undivided goal of catalyzing financial modernization; c) To promote strengthening of local management and analytical capabilities.

9. How can an SPI Platform be launched to support a public-private financial modernization partnership?

As in all new initiatives, an institution or a leader needs to come forward to articulate a vision, rally the partners around it and take principal responsibility for the implementation of a public-private partnership for financial sector modernization. In short there is no partnership without a catalyst. The catalyst of a public-private partnership for financial sector modernization could either a public institution, be it the Central Bank or the Ministry of Finance, or the Banking Association or even local civil society such as a think-tank. In case local conditions are not conducive to the complex dynamics of public-private cooperation and/or the potential catalysts perceive they lack the recognition and resources to play the catalyst function, an external player may be needed to play this role – most preferably on an interim basis. The Convergence Program has prepared an SPI Platform Toolkit to enable the European Banking Federation to assist its Associates in Eastern Europe become the champion of public-private dialogue.

10. A Technical Secretariat supports the activities of the public-private financial modernization partnership, organized around the SPI Platform concept. What is its basic philosophy?

The SPI Secretariat houses two fundamental capabilities: a) strong analytics to create consensus; and b) relentless enactment focus. Both are necessary to support the reform identification, preparation and enactment phases. The functions of the SPI Secretariat reflect the lessons learnt from analyzing the set-up of successful reform teams in several emerging market countries as compiled in a Note prepared by the World Bank in 2008. The Delivery and Reform Group created by UK Prime Minister Tony Blair is another interesting reference for a similar mandate in a reform-driven government.

The basic philosophy of the SPI Secretariat must be one of creating a uniform “problem-solving” methodology that the financial community can adopt to tackle the myriad of reform opportunities that will need to be undertaken overtime to improve the efficiency of the financial sector. Recognizing the difficulty to predict the direction, specific nature and number of future reform opportunities, it is vital that the SPI Secretariat develops scalable problem-solving methodologies that could be applied by many reform teams under limited supervision in unrelated sectors in pursuit of financial modernization goals. The EU Better Regulation, as implemented by the Convergence Program, is a good example of a methodology that supports large-scale reform efforts.

11. What are the economics of an SPI Platform? How much does it cost and what are its outputs?

Depending on country circumstances, an SPI Platform can be operated by a very small SPI Secretariat, consisting between two and four staff, also on part-time basis. Its activities can be calibrated so that its operating costs represent a very small fraction of the financial benefits that accrue to the economy (and market participants).

12. How does the SPI Platform governance contribute to effective public-private cooperation?

Constitutionally, SPI Platform partners choose together the issues to be tackled and commit themselves to evidence-based dialogue and consensus-driven solution-searching. Practising a collaborative approach through transparency and integrity builds trust between public and private sector stakeholders and goes a long way towards creating public legitimacy in the public-private dialogue, as recommended by the OECD's Principles for Transparency and Integrity in Lobbying. The outcomes are better regulatory production, less adversial relationship between regulated parties and regulators, and more efficient use of civil society expertise in activities that have a higher likelihood to influence policy actions.

13. How can an SPI Platform evolve overtime?

For the SPI Platform to be seen as the manifestation of a viable public-private partnership for financial modernization, it has to govern its activities with clear rules. It should be anchored in a local institution with a mandate that is compatible with the SPI Platform activities and namely the production of financial reform proposals conducted and executed under public-private governance. Typically this could be a think-tank or another not-for-profit institution. Also a banking association could house SPI Platform activities, provided they are conducted under a transparent and robust public-private governance framework. A good example is provided by Patti Chiari (“Clear Agreements”), Italy's financial consumer protection initiative housed in the Italian Banking Association with strong independent governance.

14. Can an SPI Platform wither?

The fate of the SPI Platform is directly linked to the reform commitment of the local community. As programmatic and participatory approaches are powerful instruments to drive ambitious reform programs, the SPI Platform may weaken as a result of the authorities' inability to translate SPI Platform outputs into timely legislative and regulatory initiatives. It may also weaken because of less energy injected in SPI Platform analytical activities. In some instances, this may be connected with resistance to adopting evidence-based solution searching methodologies. As mentioned earlier, the SPI Platform is a powerful instrument to inject transparency and integrity in policy dialogue activities.

15. What are the prospects for the financial modernization agenda?

They are encouraging, by all means. For example, the Making Finance Work for Africa initiative calls for comprehensive financial sector policies at the country level coordinating and catalyzing financial development activities by Government, private sector players and donors. “Strategies should be based on trust between regulators, policy makers and the private sector, and public-private partnerships should be encouraged”. In this context, Nigeria is planning an ambitious Financial Sector Strategy 2020 initiative. Also Rwanda experimented a large public-private Financial Sector Development Strategy. After the crisis, financial modernization will become an even more compelling political necessity. Governments will need pro-actively to take measures to ensure that financial intermediaries support the needs of the real economy – while avoiding the imprudent behaviors of the past.

The Convergence Program prepared a Note, released in February 2009, which advocates tackling financial crisis response through the twin track of financial stability measures and financial modernization reforms. The latter are essential to attenuate the negative impact on growth of the former.

16. How will future financial modernization needs be met?

Much of the demand for financial modernization advisory services will be met by professional firms that, after developing public sector practices in addition to their private sector practices, will start exploring selling their advisory services at the intersection of both markets. For instance, Ernst and Young is already monitoring this market through its Donor Dynamics magazine. A December 2008 McKinsey Quarterly article also analyzed how executives should engage with regulators. Reputable institutions, such as the International Institute of Finance, have also embraced the discipline of a responsible attitude in public-private dialogue, informed by “Better Regulation” methodologies in this document.

In parallel, as donors realign their activities away from single projects to programs, strengthen their coordination to help countries implement their own strategies, and place greater importance on growth of local management and analytical capabilities, they will have stronger incentives to replace the present donor-based and –driven technical assistance delivery channels with new tools, more cost-efficient, more collaborative and with higher sustainable impact characteristics.

Very soon, demand for financial modernization assistance and supply of advisory services will inevitably converge around the areas explored by the pioneering Convergence Program. Whether the institutional arrangements which countries will choose carry the SPI Platform label or not, the World Bank and Italy's Ministry of Economy and Finance will be entitled to cash a large moral dividend of their foresighted investment in how to tackle financial modernization.

NEWS

Rumyana — 2009-09-30T09:24:17Z

**NEWS**
DATE AND LOCATION	TOPIC
24 February 2010 Rome (Italy)	Convergence Program and ABI Servizi release case study with a new methodological approach to identify financial modernisation opportunities in the retail deposit market .
15 February 2010 Tirana (Albania)	SPI Albania Committee sends Thank You letter to World Bank for the Convergence Program's assistance.
30 January 2010 Rome (Italy)	Convergence Program core team and special guests meet to consider 2005-2010 accomplishments and next steps Agenda;SPI Platform Overview; EU Civil Society Facility;Concluding Statement;Minutes; Group Picture.
16 December 2009 Washington, DC (USA)	Letter from the Head of the Convergence Program to SPI Albania Committee Members and Permanent Observers.
10 December 2009 Brussels (Belgium)	European Banking Federation launches SPI Platform Toolkit distilling for its Eastern European Associates the 5-year experience gained by the Convergence Program in structuring public-private dialogue (Annex Part 1; Annex Part 2).
3 December 2009 Brussels (Belgium)	Presentation to the 29^th Meeting of the European Banking Federation Associates on how Banking Associations of the Western Balkans and Turkey could strengthen their policy dialogue capabilities with support from the EU Civil Society Facility.
1 December 2009 Eschborn (Germany)	SPI Platform seminar with GTZ and German Development Institute staff.
20 November 2009 Rome (Italy)	Presentation on how the SPI Platform helps create connectivity between authorities and market participants at an Assonime Workshop.
19 November 2009 Tirana (Albania)	SPI Albania releases Report on Operational Activitiesthe engine of the financial modernization program.
10 November 2009 Washington, DC-Rome (Italy)	Release of the SPI Albania Handover Report for consideration by local stakeholders.
22-23 October 2009 Yerevan (Armenia)	Consultations with Armenia financial stakeholders on a proposed USAID-sponsored financial modernization program.
30 September 2009 San Marino (Rep. of San Marino)	Presentation on SPI Platform to Central Bank of San Marino and the Financial Community
24 June 2009 Rome (Italy)	Presentation on International Perspectives of Household Financial Services
13 May 2009 Washington, DC (USA)	Presentation to the World Bank's Middle East and North Africa Management Group
28-30 April 2009 Vienna (Austria)	World Bank Group Public-Private Dialogue International Workshop
13-17 April 2009 Yerevan (Armenia)	Presentation on SPI Platform to Armenia's Financial Community
2-3 April 2009 Tirana (Albania)	EU Western Balkans Donor Co-ordination Conference
31 March 2009 Cairo (Egypt)	Convergence Program Briefing to Egypt's Minister of Investments
6 March 2009 Washington, DC (USA)	Seminar on SPI Platform hosted by USAID
23 January 2009 Tirana (Albania)	Conference on SPI Albania- One Year Since its Inception
15 January 2009 Tirana (Albania)	SPI Albania Projects Seminar, European University of Tirana
3 December 2008 Brussels (Belgium)	European Banking Federation SPI Platform Working Seminar
25 November 2008 Brussels (Belgium)	European Banking Federation Executive Committee Chairman writes to World Bank in appreciation for the activities of the Convergence Program
18 November 2008 Washington, DC (USA)	Convergence Program responds to 39 questions by IFC independent Evaluator
7 November 2008 Bari (Italy)	Apulia Region's International Conference on SPI Albania
6 November 2008 Brussels(Belgium)	Address to the Executive Committee of the European Banking Federetion
31 October 2008 Belgrade (Serbia)	Serbia's Ministry of Finance invited the Head of the Convergence Program to an informal discussion on the SPI Platform
25 September 2008 Kiev (Ukraine)	Convergence Program Concept EU Delegation Briefing
24 September 2008 Chisinau (Moldova)	SPI Platform Presentation to the Moldovan public-private banking community
18 July 2008 Belgrade (Serbia)	Address to CEE/SEE Banking Forum
16 July 2008 Washington, DC (USA)	Presentation to the World Bank's East Asia and Pacific Financial and Private Sector Group
5 June 2008 Tirana (Albania)	Presentation at European Banking Federation 26^th Annual Meeting of the Associates
24 April 2008 Washington, DC (USA)	Letter to Bank of Albania and Association of Albanian Banks on the setting-up of SPI Albania, based on the mandate received.
16 April 2008 London (UK)	Briefing to DFID
15 April 2008 Brussels (Belgium)	Informal Brainstorming Session with European Commission's DG Markt and Market Participants
18 March 2008 Budapest (Hungary)	Presentation at the 18^th BACEE Conference (Banking Association of Central Europe)
4 March 2008 Dhaka (Bangladesh)	Convergence Program Banking Community Seminar
24-25 January 2008 London (England) and Bari (Italy)	Outline of the SPI Adriatic project for discussions with EBRD and Regione Puglia
19 January 2008 Bari (Italy)	Press Conference on SPI Albania's Launch (in Italian)
5 December 2007 Paris(France)	“Pioneering RIA in South-East Europe” Presentation at Committee of European Securities Supervisors
15-16 October 2007 Washington, DC (USA)	Presentation on SPI Romania's Credit Bureau project to the International Finance Corporation's Annual FinNet Meeting (undelivered)
15 June 2007 Rome (Italy)	Second Progress Report discussions with Italy's Ministry of Economy and Finance, Bank of Italy and Italian Banking Association officials
22 December 2006 Zagreb (Croatia)	Presentation to Croatia's Securitization Law Public-Private Steering Committee
18 December 2006 Rome (Italy)	First Progress Report discussion with Italy's Ministry of Economy and Finance, Bank of Italy and Italian Banking Association officials
29 November 2006 Vienna (Austria)	Second Regional Host Supervision Workshop
25 September 2006 Washington,DC (USA)	Cooperation letter sent to the World Bank Regional Director for Private and Financial Sector Development
4 June 2006 Washington, DC (USA)	Convergence Program Head's programmatic letter to short-listed candidates (Economist Ad.
30 May 2006 Tirana (Albania)	Financial Policy Issues of Deposit Insurance Schemes in South-East Europe Technical Seminar
10 May 2006 London (UK)	“The Special Project Initiative” -Presentation to Convergence Group Meeting Development"
2 April 2006 TIrana (Albania)	“How Has the Italian Banking Association Contributed to Financial System Development”-Lessons for Albania (Press Release).
4 March 2006 Bari (Italy)	Press Release on the Convergence Program's contribution to the Italian-Albanian Remittances Seminar
3 March 2006 Bucharest (Romania)	Press Release on the Convergence Program findings of the Romanian Deposit Guarantee Fund study presented at the RDGF 10^th Anniversary Symposium
21 February 2006 Bucharest (Romania)	Press Release on Seminar with the Board of the Association of Romanian Banks and the National Bank of Romania on the Cesarini Report on the organization and activities of the Italian Banking Association
20 February 2006 Zagreb (Croatia)	Press Release on Seminar with the Board of the Croatian Banking Association on the Cesarini Report on the organization and activities of the the Italian Banking Association
4 October 2005 Washington DC (USA)	Remarks prepared for delivery by World Bank Financial Sector Vice President to IFC's Global Financial Markets Retreat
29 May 2005 Tsakhkadzor (Armenia)	How to Build a Public-Private Partnership: An Address to Armenia Forum
21 May 2004 Brdo (Slovenia)	Briefing to Center of Excellence in Finance Supervisory Board Meeting
22 September 2003 Dubai (UAE)	Supporting Financial Sector Reform WB-IMF Annual Meeting
23 May 2003 Bucharest (Romania)	Presentation on Convergence Program Initiative to Governor's Club Meeting

ARTICLES
DATE	TOPIC
16 July 2009	IFC SmartLessons on SPI Albania Auction Procedures Project
18 June 2009	European Banking Federation Newsletter article on the SPI Platform
18 May 2009	Ernst & Young Donor Dynamics Magazine article on SPI Albania activities
25 February 2009	Panorama newspaper article on SPI Albania (in Albanian)
24 February 2009	Review of World Bank Group's Support to Structured Public-Private Reform Platforms
28 July 2008	Bankar Magazine article on SPI Platform
26 February 2008	Interview by Ziarul Financiar on Electronic Processing of Debit Instrument Project of SPI Romania
24-25 January 2008	Press Reviews on SPI Albania Conference in Bari, Italy (in Italian)
20 December 2007	European Banking Federation article on SPI Romania in its review of Better Regulation practices in EU Member Countries
13 September 2007	World Bank Article on “Unleashing Romania's Financial Revolution”
17 July 2007	International Finance Corporation SmartLessons on SPI Romania

REGULATORY IMPACT ASSESSMENT KNOWLEDGE TRANSFER
DATE AND LOCATION	TOPIC
11-12 January 2010 Tirana (Albania)	Regulatory Impact Assessment Seminar
22-24 September 2008 Ljubljana (Slovenia)	Second Regional Regulatory Impact Assessment Seminar
31 January 2008 Tirana (Albania)	Regulatory Impact Assessment Knowledge Transfer Workshop
13-15 November 2007 Sofia (Bulgaria)	Regulatory Impact Assessment Knowledge Transfer Workshop
12-14 September 2007 Lubljana (Slovenia)	First Regional Regulatory Impact Assessment Seminar
16 April 2007 Bucharest (Romania)	Regulatory Impact Assessment Knowledge Transfer Workshop
15 September 2006 Bucharest (Romania)	Romanian Banking Institute Symposium on Regulatory Impact Assessment

OPERATIONS

Rumyana — 2009-09-28T09:34:52Z

Albania

Although the first contacts with Albanian authorities started in 2004 during the Convergence Program's pre-launch phase, the World Bank-Puglia Region conference on remittances in Bari on 3-4 March 2006 marked the beginning of the Convergence Program's activities in Albania.

Consistent with our mandate to find practical solutions to financial intermediation opportunities, we made available to participants a concise compilation of concrete regulatory and technical interventions that would improve the service level to remittance providers and recipients.During the conference, Convergence built the case for public-private cooperation and presented an Action Plan proposal. It also summarized the proceedings of the conference.

Following the conference, Convergence teamed up with the Italian Banking Association to analyze the potential market for remittances flows to Albania from Italy.In a well attended seminar in Tirana on 27 July 2006, ABI presented an analysis of banking habits and needs of Albanian clients of Italian banks. Convergence offered an analysis of the best partnership opportunities, on a region-by-region basis, of Italian banks for the Albanian banking community. ABI hosted a similar meeting in Milan on 3 November 2006 where a delegation of Albanian banks met with more than ten Italian banks interested in building up their bank remittance products in connection with Albania.

Separately, as first introduction of the public-private partnership for financial sector modernization concept, Convergence helped organize a seminar in Tirana on 3 April 2006 where Prof. Francesco Cesarini illustrated the main features of the Italian Banking Association activities, based on his Report. At the same event, attended by the Albanian public and private financial sector community, Convergence tabled a proposal to establish an SPI-like structure in Albania.

In July 2006, as an example of evidence-based policy design, Convergence prepared for the Albanian Association of Banks an analysis of the potential impact on bank intermediation of the proposed changes in collateral enforcement procedures – an activity where the AAB had prepared a technical paper for official consideration.

A first attempt to launch an SPI Platform in Albania in the fall of 2006 failed because of the difficulty to identify suitable local staff to lead the SPI Secretariat. In December 2007, building on the success of the SPI Romania pilot and in the context of the Regione Puglia's EU-supported Aquifalc project, preparatory work re-started. In early January 2008, Bank of Albania and Association of Albanian Banks asked the Convergence Program to help establish SPI Albania. On 19 January 2008, the Governor of Bank of Albania and the Vice-President of the Albanian Banking Association launched SPI Albania in a press conference in Bari, organized at the margin of Italy's Annual Banking Convention, and chaired by Regione Puglia President Nichi Vendola.

Regione Puglia supported SPI Albania in the context of the Aquifalc project, financed by EU Regional Cooperation Funds, and implemented by the Centro Italo-Albanese per la Ricerca Economica e Sociale, affiliated with the Department of Economics of the University of Bari. Aquifalc has generously supported important analytical activities of the Program.

SPI Albania's 2008 program was built on analytical approach involving extensive consultation process with SPI Albania stakeholders, through a questionnaire-based survey and interviews with banks' and BoA's representatives. The result of these consultations was a comprehensive pipeline, out of which stakeholders selected the top priority issues to be firstly undertaken under SPI Albania.

SPI Albania's activities accomplishment for 2008 entail in completing three projects, promoting two legislative outputs and paving the path to further legislative amendment through its series of analytical recommendations to be fulfilled in 2009. In 2008 alone, there have been 13 projects working group meetings, gathering more than 60 professionals from 33 institutions, of which 17 public institutions and 16 private institutions. Please refer to the 2008 Annual Report for additional details on the activities.

The first six months of 2009 SPI Albania's analytical activities were filled with project activities and important institutional milestones. On 23 January 2009 a specific SPI Albania conference highligthed the program's achievements and impact on the Albanian Financial Sector. Please consult the SPI Albania Monthly Activity Reports for more details. For general information on SPI Albania, please refer to its portal.

Bosnia-Herzegovina

Bosnia-Herzegovina's public and private stakeholders were consulted several times during the Convergence Program's design phase in 2003 and 2004 both in Sarajevo and Banja Luka. During the pre-launch activities, discussions were held with the banking supervisory authorities of the two entities on the idea to organize a one-day banking community summit to discuss a public-private modernization program. The Financial Supervision Commission was also interested in exploring the consultative method to prepare the new Securities Law.

While Convergence was not able to launch in-country activities, representatives of Bosnia-Herzegovina's public institutions attended the Convergence Program's regional activities in Ljubljana (Financial Regulatory Impact Assessment Knowledge Transfer) and Vienna (Regional Host Supervisory Cooperation). The latter program was actively co-managed by the Former Governor of the Central Bank of Bosnia-Herzegovina, Mr. Peter Nicholl.

Convergence Program experts (Mr. Sonje and Ms. Ognjenovic) spoke at a regional meeting of the European Forum of Deposit Insurers held in Sarajevo in December 2005 on the analytical framework for a more risk-sensitive financial policy for deposit insurance funds, based on the Romania's experience.

Prospects for Bosnia-Herzegovina's involvement in public-private financial sector modernization have resurfaced again in September 2009 when Italy's Apulia Region has invited the Central Bank and the Association of Banks to join in a new regional partnership (together with Albania and Montenegro) to establish an Adriatic Bank-Enterprise Observatory which will prepare financial efficiency reforms, building on the experience in public-private governance and analytical collaboration of the Convergence Program's SPI Platform. If EU IPA funds can be mobilized, this project will start in mid-2010.

Bulgaria

Upon invitation by the Bulgarian Financial Supervision Commission, Convergence's first activity in Bulgaria has been the organization of a Regulatory Impact Assessment Knowledge Transfer Program to help local institutions become more familiar with Regulatory Impact Assessment techniques between November 2008 and January 2009. Click here to read the seminar program and material.

This knowledge transfer seminar provided detailed information how Better Regulation RIA process is structured and on how to assess the costs and benefits of financial regulation. Participants worked on a practical case study on MiFID facilitated by UK FSA staff and carried out an Impact Assessment analysis on two regulations proposed by the Bulgarian Financial Supervision Commission. The workshop enjoyed an acclaimed success documented in this letter.

In addition, Convergence started discussions to support a pilot public-private evidence-based regulatory design project. It brokered the inclusion of the Financial Supervision Commission in a regional program partnership to develop RIA activities that applied, under Italy's Apulia Region leadership, for EU financing under the South-East Europe Transnational Cooperation Program. Unfortunately, the project was not selected for financing.

Croatia

Following preliminary discussions started in the fall of 2005, the Croatian Ministry of Finance invited Convergence in April 2006 to assist in the preparation of a proposal for a securitization law. In collaboration with EBRD and KfW, Convergence helped frame the first-ever public-private partnership for the preparation of Croatia's securitization law, under the oversight of a steering committee created by the Minister of Finance, chaired by the Ministry of Finance with Croatian National Bank, Croatian Securities Commission, Croatian Banking Association, KfW, EBRD and Convergence participation. The first, and perhaps most important, step has been to design the architectural and governance arrangements for the project. Helping assemble a multinational team of legal experts to prepare an annotated terms of reference for the proposed law has been the second main step. Convergence's specific contribution has been to establish the function of Independent Legal Advisor, supporting the Steering Committee in the consideration of the legal documents that, from time to time, will be sent for its consideration.

After commenting the terms of reference, and based on Steering Committee discussions, the Independent Legal Advisor prepared a summary document for market consultations. Ministry of Finance launched consultations with a press conference. Building on the market consultation feedback (including from the European Securities Forum) and using international comparative information compiled by a Convergence legal expert, the Independent Legal Advisor prepared drafting guidelines for the legal drafting team, composed largely of lawyers appointed by public institutions, with support from Arhivanalitika, a local financial advisory firm.

The Independent Legal Advisor issued two additional opinions, in December 2006 and in June 2007, on successive draft laws prepared by the legal drafting team. Reflecting the practical constraints experienced by the legal drafting team in drafting the law, the Independent Legal Advisor has also updated the drafting guidelines that will serve as benchmark as the final draft law begins its official enactment process.To facilitate enactment review, project coordinator Arhivanalitika has benchmarked the draft law against market feedback and Independent Legal Advisor opinion. Further changes in the draft law are possible before final enactment. In parallel, the Croatian Banking Association has sponsored the preparation of a Regulatory Impact Assessment of the proposed law. The exercise has helped authorities better assess the potential magnitude of the new financial flows generated by securitization, particularly with respect to the foreign indebtedness situation. Preparing a draft law in a public-private context is an elaborate process. But it is also a process that makes the best use of available expertise in the public and private sector alike, both domestically and internationally.

In February 2006 (Press Release), Prof. Cesarini discussed his Report on the role of the Italian Banking Association in promoting financial dvelopment in Italy at a seminar hosted by the Board of the Croatian Banking Association.

Moldova

Engagement with Moldova started with an interaction with the leadership of the Association of the Moldovan Banks during the Annual Meeting of the Associates of the European Banking Federation, stimulated by the Convergence's presentation.
In September 2008, Convergence was invited to preparatory discussions with public and private stakeholders in Chisinau (National Bank of Moldova, Ministry of Finance, commercial banks and the donor community). The visit culminated with a presentation to the Moldovan Financial Community, hosted by the Association of Moldovan Banks in the presence of the First Deputy Governor of the National Bank of Moldova. Discussions with Association of Moldovan Banks and National Bank of Moldova continued quite actively during the October 2008-March 2009 period, through correspondence and video-conferences. Difficulties in identifying adequate medium-term financing sources for the SPI Secretariat were a major obstacle in launching SPI Moldova. Contacts will continue as there was sufficiently strong interest by both public and private stakeholders to join forces for a financial modernization program.

Montenegro

Montenegro's public and private stakeholders were consulted several times during the Convergence Program's design phase in 2003 and 2004. Representatives of Montenegro's public institutions attended the Convergence Program's regional activities in Ljubljana (Financial Regulatory Impact Assessment Knowledge Transfer) and Vienna (Regional Host Supervisory Cooperation).

A more active engagement started in January 2008 when Montenegro's stakeholders were invited to attend the press conference for the SPI Adriatic launch hosted by Italy's Apulia Regione President Nichi Vendola, with Convergence Program's technical support.

The Apulia Region invited Montenegro's institutions to join a regional project partnership to develop evidence-based policy design activities with support from EU funding under the South-East Europe Transnational Cooperation Program. Unfortunately, the project was not selected for financing.
During the project partnership discussions, the Association of Montenegrin Banks hosted an op-ed written by the Convergence Program team in the July 2008 issue of its Bankar magazine.

Prospects for Montenegro's involvement in public-private financial sector modernization have resurfaced again in September 2009 when Italy's Apulia Region has invited the Central Bank and the Association of Banks to join in a new regional partnership (together with Albania and Bosnoa-Herzegovina) to establish an Adriatic Bank-Enterprise Observatory which will prepare financial efficiency reforms, building on the experience in public-private governance and analytical collaboration of the Convergence Program's SPI Platform. If EU IPA funds can be mobilized, this project will start in mid-2010.

Romania

Convergence's activities started in Romania in May 2005 with the invitation by the Romanian Deposit Guarantee Fund (RDGF) management to address the adequacy of the size of the fund and the related issue of the banks' contribution through analytics and market consultations. Given the complexity of the assignment, Convergence prepared an initial issues note which, a few months later, was expanded into preliminary findings. In parallel, Convergence retained Marko Škreb, the former Governor of Croatian National Bank, to act as a peer reviewer throughout the process. Early and preliminary feedback was useful to determine the future course of action.

To provide the Romania financial community access to best European knowledge on deposit insurance issues, Convergence established a partnership with the Italian Deposit Insurance Fund (FITD). FITD arranged for Convergence to seek feedback on the Romania project in the October 2005 meeting of the European Forum of Deposit Insurers (EFDI) in Warsaw. A similar presentation was made in November 2005 to a group of international banks with significant Central and Southern Europe presence — in the context of the Convergence Group. FITD and Convergence discussed their joint analyses1 in a technical seminar with Romanian participants that proved essential to build common understanding on the institutional, market and financial considerations of a potentially revised RDGF financial policy. Shortly afterwards, Convergence further tested the analytical framework in an important EFDI regional meeting in Sarajevo.

Six months into the assignment, Convergence and FITD delivered their joint final conclusions (technical annex) to RDGF management with recommendations to adopt a new financial policy with a hybrid risk-based ex ante/ex-post financing mechanism to support an almost doubling of the fund's size to support depositors' confidence. The assignment concluded with a presentation to the RDGF Board, backed by the final Škreb independent opinion, and an intervention at the Symposium marking the RDGF's 10^th Anniversary on March 2, 2006. In March 2006, the Romanian Parliament enacted a series of law amendments to reflect the substance of the study recommendations.

To share the lessons learnt in this project in the region, Convergence partnered with the Bank of Albania and the Albanian Deposit Insurance Agency to organize a regional technical seminar on financial policy issues for transition countries on May 30, 2006. More than 100 participants attended the event that featured important presentations from international experts. The essence of the lessons learnt was captured in a World Bank technical note.

Following the successful RDGF pilot project, National Bank of Romania, Romanian Banking Association and Ministry of Public Finance launched a financial sector modernization program in the spring of 2006 with Convergence Program support. This decision followed a seminar In February 2006 Press Release, hosted by the Board of the Association of Romanian Banks with National Bank of Romania participation, where Prof. Cesarini discussed his Report on the role of the Italian Banking Association in promoting financial development in Italy. During this seminar, Convergence Program tabled a proposal to support ARB's stepped-up involvement in analytical activities.The Convergence Management Group thoroughly discussed the approach to this initiative (newspaper ad) in its April 2006 Tirana Retreat.

The National Authority for Consumer Protection joins the partnership in October 2006. In June 2006, the Convergence Program shared with the Romanian stakeholders a vision for SPI Romania's growth: strong discipline to generate and process a pipeline of reform proposals with quantified P&L impact on the banking sector that paves the way for a progressive shift of responsibility for analytical activities to the Romanian Banking Association under the Convergence's honest-broker aegis.

Since its operational launch in September 2006, the program has dealt with twelve projects. Under its aegis, several important issues have been successfully addressed such as credit information sharing, anti-money laundering law, electronic settlement of debit payment instruments, and creation of a bank ombudsman. In parallel, the Convergence Program has delivered a structured Regulatory Impact Assessment program to enhance the evidence-based regulatory design capabilities of the Romanian regulatory community (part of the EU better regulation approach). In May 2007, the Romanian stakeholders decided to take over operational and financial responsibility for the program. This happened in March 2008, marking the end of a successful 2-year incubation by the Convergence Program. For general information on SPI Romania, please go to its portal.

Serbia

After several consultations with the authorities and market participants in 2003 and 2004 during the design phase, Convergence Program started sharing the first lessons of its SPI Romania experience with Serbian public and private stakeholders in December 2006. A few months before, Convergence Program attempted to design a technical intervention downstream of a World Bank policy loan.Awareness-building continued with further visits to Belgrade in March, July and September 2007, followed by other meetings in July and October 2008. SPI Romania experts joined in several visits.

These visits enabled to identify an opportunity to channel the Convergence Program expertise in support of the Government's Regulatory Simplification Program launched in January 2009, under oversight by the Deputy Prime Minister and Minister of the Economy.

The Serbian authorities requested Convergence Program assistance based on the latter's proven track record of orchestrating a large project working group-based modernization program.The activities that the Convergence Program-funded Serbian leader of the so-called “Financial Guillotine” will undertake during 2009 are summarized in these Terms of Reference.

Convergence's Serbia project, different from the Albania and Romania experiences, is based on an assessment of strong local committment and rich expertise to execute a large-scale modernization program. Accordingly, the Convergence Program does not take executive responsibility to operate the public-private partnership, not even on a temporary basis. However, it makes adoption of its work planning and analytical methodologies the core of its specific contribution.

Regional

To contribute to the development of the “better regulation” culture in the financial sector, Convergence has teamed up with the Ljubljana-based Center of Excellence in Finance (CEF) to offer a three-day seminar on Financial Sector Regulatory Impact Assessment on September 12-14, 2007. Click here for the 2007 seminar material.

After its success in 2007, a second edition of the Financial Sector Regulatory Impact Assessment seminar was held on September 29 - October 01, 2008. In addition to presentations by EU financial regulators and experts, this year's program featured RIA case studies from Albania, Bulgaria and Romania delivered by local experts. Click here for the 2008 seminar material.

The association with the Center of Excellence in Finance started in 2004, when Convergence presented its proposed activities to CEF's Supervisory Board.

In 2005, Convergence's pre-launch planning envisaged relying on the Center of Excellence in Finance as logistical base for its regional operations, following discussions between World Bank senior management and Slovenia's Ministry of Finance.

Beyond the activities with the Center of Excellence in Finance, the regional dimension was always important for the Convergence Program. Initially, together with the EBRD, it was associated with the convening of an informal group of strategic bank investors in the region, conveniently called “Convergence Group”, that met to share notes on most pressing regulatory constraints for their businesses. These informal discussions proved valuable to determine the appropriate boundaries for Convergence's activities.

Shortly before its official launch, on April 28, 2005, Convergence outlined the general “honest broker” principles of a possible collaboration with the Convergence Group.

A year later, In a meeting hosted by EBRD on May 10, 2006, Convergence briefed regional market players about the SPI Romania concept which was designed to meet their needs for a structured interface with authorities.

Faithful to its public-private mandate, Convergence has also contributed to the emerging need for regional supervisor cooperation with two technical seminars in September and November 2006. Issues discussed were harmonization of reporting requirements, common approaches to consumer protection issues and governance of foreign-owned banks. Convergence presented a summary of this work to a Regional Financial Stability Conference organized by Bank of Albania on October 30-31, 2006.

EVALUATIONS

Rumyana — 2009-09-24T16:06:29Z

The novelty of the Convergence Program's SPI Platform approach, the significant amount of professional and financial resources involved as well as its potential high impact suggested that this work be evaluated at an early stage in order to take prompt adjustment measures.

Following the 2007 SPI Romania evaluations, the International Finance Corporation has conducted in late 2008 an in-depth review of SPI Albania activities as part of its global review of public-private reform support platforms. The IFC Independent Review shows that the SPI Platform ranks among the Top Three best performing reform support platforms worldwide.

In addition, the Convergence Program has introduced the good practice to have the project management activities of the SPI Secretariat evaluated by the SPI Project Working Groups at the completion of the Project Working Group activities through structured questionnaires. The evaluations help identify the value added by the SPI Secretariat in terms of analytics, honest brokering the public-private technical discussions and preparing a final recommendation paper summarizing the technical consensus view.

Finally, the Regulatory Impact Assessment Knowledge Transfer activities in Albania, Bulgaria, Romania and regionally were also subject to careful feedback evaluation from participants.

Convergence Program Independent Evaluation Reports
DATE	EVALUATOR	REPORT
March 2007	Mr. Marko Škreb TOR	Presentation Final Review
May 2007	Mr. Alberto Bazzan TOR	Final Review
April 2009	International Finance Corporation	SPI Platform Analysis Full Review Q&A with Evaluator

SPI PROJECTS EVALUATIONS
Date	SPI Project	Country
November 2009	SPI Albania Secretariat Evaluations of Five Completed Project	Albania
October 2009	Improving Bank's Liquidity Risk Management	Albania
June 2009	Improving Consumer Financial Educaton	Albania
May 2009	Reducing Cash Transactions	Albania
March 2009	Improving Auction Procedures for Immovable Collateral under Foreclosure	Albania
December 2008	IFRS	Albania

RIA KNOWLEDGE TRANSFER EVALUATIONS
Date	Country
January 2010	Albania (Participants Evaluation) (Instructor's Evaluation)
October 2008	South-East Europe
February 2008	Albania
December 2007	Bulgaria (Part 1)
September 2007	South-East Europe
June 2007	Romania (Part 1)