In July 2005 the World Bank and Italy joined in a partnership to promote financial sector modernization in South-East European (SEE) countries through micro-regulatory reforms designed in partnership by authorities and market participants, under the aegis of the newly-established “Convergence” Program (Convergence).

A first study tour of selected South-East European countries in July 2002 pointed to the usefulness to look at the benefit for financial sector reform from a closer cooperation between financial authorities and banking associations. In response to these early findings, a concept paper drafted in October 2002 envisaged possible World Bank support to enable banking associations to better respond to the needs of the authorities. This concept was tested in an internal World Bank seminar in February 2003. Following a lively debate on need and desirability for a Bank’s role to help strengthen the capacity of banking associations to contribute to financial sector reform, the project changed entry point. The feasibility of a proposed public role to catalyze public-private dialogue was explored in a broad range of consultations which started in March 2003, based on this one-pager. In retrospect, the Convergence Program design, which has remained remarkably anchored around the March 2003 framework, drew tremendous strength from the early advice and views of World Bank colleagues.

The “Convergence” concept was first floated publicly at the May 2003 meeting of the Governors’ Club of the Balkans, Black Sea and Central Asia, hosted by the National Bank of Romania. It was mentioned in the keynote speech at the SUERF 2003 Colloquium in Tallinn (Estonia). Follow-up discussions with country delegations took place during the 2003 WB-IMF Annual Meeting in Dubai.

Encouraged by strong commitment by regional Governors, Italy pledged support to Convergence during the October 31, 2003 meeting with South-East Europe Ministers of Finance held in Venice in the context of Italy’s EU Presidency.

The 6th Supervisory Board meeting of the Center of Excellence in Finance, held in May 2004 in Brdo (Slovenia), with the participation of senior Ministry of Finance and Central Bank officials, offered another important public venue to discuss the pre-launch arrangements of the Convergence Program, in the context of a proposed partnership with CEF discussed between Slovenia’s Minister of Finance and World Bank Managing Director Zhang.

The Convergence Program’s policy focus is informed by a recent statement by an ECB Executive Board member: “Financial modernization refers to the process of financial innovation and organizational improvements in the financial system that reduces asymmetric information, increases the completeness of markets, increases opportunities for agents to engage in financial transactions through (explicit or implicit) contracts, reduces transaction costs and increases competition”.

Financial modernization requires a set of sophisticated analytical, organizational and consultation skills as found in high-performing societies. Convergence has reviewed the organizational features and analytical capabilities of the Italian Banking Association (ABI), as an example of a market participant organization engaged in close dialogue with authorities. Prof. Francesco Cesarini discussed his Report in a road show in the region, with presentations to the banking communities in Croatia and Romania in February 2006 and Albania in April 2006.

In an address at the “Armenia: Financial Sector Development - Directions and Challenges” conference held in Tsakhkdzor on May 29, 2005, the Head of Convergence articulated the case for the need also for authorities in transition and emerging countries to engage with market participants in policy design.

Launch Arrangements

Based on a Vision Statement drafted in March 2004 and after outlining the business plan approach in October 2004, the Convergence Program management team had a first meeting in January 2005. The management set out high-level objectives, identified issues and challenges, and set out the rules of engagement with authorities and market participants. Its honest-broker vision connecting various constituencies is mapped in this Table. In March 2005, it prepared the Launch Brochure ahead of discussions during the WB-IMF Spring Meetings in April 2005. In June 2005, the Convergence management team undertook a study tour of major European Banking Associations (visit report). The flurry of launch activities between January and September 2005 is summarized in this Report on the Convergence Program’s Pre-Operational Phase.

Distinctive Approach

Convergence’s effectiveness is based on four pillars:

  • Strong implementation orientation (success measure is regulatory changes enacted - not studies);
  • Practical focus (targeting regulatory changes that make a measurable difference on financial intermediation, via extensive RIA);
  • Market-friendliness (sourcing micro-regulatory reform issues from both authorities and market participants)and
  • Flexible cooperation arrangements with several technical partners.


Its short-term success is measured by the volume of regulatory changes enacted through this public-private consultation mechanism. Its medium-term success is measured by the progressive build-up of analytical activities within the market participant community.

Convergence’s mandate is accomplished when local public and private stakeholders have developed the analytical, organizational and consultation skills that will sustain continuous financial sector fine-tuning reforms under local ownership, as practiced in the EU context.


Following a pilot phase of less than a year with various experiments of public-private approaches for financial sector modernization (summarized in the March 2006 Activity Report), Convergence Program launched the SPI Platform Initiative to fulfill its institutional mandate to foster both an analytical culture on financial policy matters and a collaborative approach between authorities and market participants in South East European countries. Convergence Program articulated its strategic SPI Platform approach in a brochure prepared in February 2006.

The SPI Platform is organized around the following two pillars:
- A high level public-private country Steering Committee that sponsors analyses of micro-regulatory changes as an input into official regulatory action decisions.
- A Technical Secretariat that supports these analyses done by public-private working groups, with the support of outside experts if needed.

Please visit our Toolkit and Evaluation sections for more details on the SPI Platform characteristics.


The strong performance potential shown by the SPI Platform in Romania, as echoed by widespread external support, managed to forestall in October 2006 the intention by then-incoming World Bank management to proceed to early termination of the partnership with Italy because of new institutional priorities. The partners’ subsequent decision to further extend the term of the Convergence Program from December 2007 to April 2010 led to the full accomplishment of the Convergence Program’s pilot mandate as the feasibility of public-private financial modernization was proved beyond any possible doubt. The post-crisis emphasis on financial efficiency will undoubtedly offer new opportunities to consider scaling up the World Bank’s support to country-based financial modernization programs executed through collaborative public-private partnerships, supported by the favorable outcome of several independent evaluationsbenchmarking inter alia some thirty World Bank Group investment climate reform platforms operating worldwide.

Expansion Plans

The rationale for a wider roll-out of the SPI Platform is set out in 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.

In September 2009, Convergence Program and European Banking Federation agreed to co-operate to prepare a SPI Platform Toolkit that would enable EBF to assist its Associates in Eastern Europe to promote the establishment of an SPI Platform in their respective countries.In February 2010, the European Commission made available programmatic and funding support through its Civil Society Facility for the Western Balkans and Turkey for the roll-out and further consolidation of SPI Platforms.

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