Central Banking and Financial Inclusion

Abstract

The chapter examines the nexus between financial inclusion and central banking, and how the relationship impacts on conduct of monetary policy. It highlights the progress on financial inclusion in Africa, and how it influences the behaviour of firms and households, which in the long run affect the efficiency of monetary policy transmission mechanism. The financial risks associated with financial inclusion are well noted, including discussion on how the risks may compromise financial stability; suggestions are offered on actions that may be taken to support financial inclusion. The chapter also outlines the measures to be undertaken by financial institutions to further support financial inclusion and the key role of central banks in ensuring financial stability through its regulations, supervision, and licensing.