Creating a Sustainable Financial System: A Role for Finance Ministries

This paper investigates various roles that finance ministries can assume to promote those policies, regulations and standards which help to create a sustainable financial system. Finance ministries typically interact with the financial sector in many ways, from regulator and supervisory mandate setters to tax authority and sovereign debt issuers. All of these points of leverage empower them to play a key role in making financial systems sustainable. Sustainability is still a relatively new concept in financial sector policy, which has in the past decade been preoccupied with strengthening financial stability and supporting economic growth. In this paper, a sustainable financial system is taken to be a financial system that performs its central functions, such as the provision of savings possibilities and the allocation of capital, while taking into account the demands and needs of the economy, society and the environment.