Good morning, afternoon and evening from wherever you are joining us today and warm welcome to the Knowledge Exchange Program-3 on CBDC and its implications on Financial Inclusion, co-hosted by Bangko Sentral Ng Pilipinas (BSP).
- Allow me to express my gratitude to Governor Benjamin Diokno in supporting to be a co-host for the third edition of the Knowledge Exchange Program which has become a strategic platform for AFI member institutions to learn and share on topics of mutual interest.
- Members of the AFI network are diverse in terms of geography, socio-economic development, cultural contexts, and levels of financial inclusion. Different approaches are thus required to devise policy solutions that address financial inclusion challenges in various jurisdictions. There are also some at different stages of the financial inclusion journey, some with more complex challenges and different priorities. Others are looking for very specific innovative policy responses to advance their financial inclusion objectives even further.
- At AFI we try to tailor our programs to specific member needs and knowledge exchange program is one such platform where we co-create the learning agenda with the members on identified priorities. Member institutions engage into open dialogue with other members from the network focusing on their country-specific implementation challenges that can receive practical recommendations from peer regulators who are facing similar challenges and issues.
- This edition of the Knowledge Exchange Program has been developed in close partnership with member institutions and it is great to see the participation of representatives from Bank Negara Malaysia (BNM), Bank of Thailand (BOT), Bangko Sentral Ng Pilipinas (BSP), Central Bank of Bahamas, Central Bank of the Russian Federation, National Bank of Cambodia, Central Bank of Armenia, Central Bank of Nigeria and Central Bank of Ghana.
- This Knowledge Exchange Program will focus on Central Bank Digital Currency and its potential impact on financial inclusion led by participating member institutions and identified stakeholders and knowledge partners including developed country regulators (Risksbank), development partners (IMF, BIS, CGAP) and private sector partners (Mastercard, Visa, Thune’s), who are experts on specific topics.
- The programme has three major focus areas
- CBDC and its potential for advancing financial inclusion
- Consumer protection and CBDC for cross border payments
- Technical design choices for regulators
According to BIS data, financial inclusion has been a significant motivation for the development of CBDCs in emerging markets and developing countries, whereas for advanced economies other motivations, such as monetary policy and payment system modernization have ranked higher.
This is confirmed by statements from AFI members who are leading in CBDC development and implementation, such as the Central Bank of the Bahamas, People’s Bank of China and the Central Bank of Nigeria which recently launched the e-naira as the first African CBDC live deployment.
CBDCs designed with financial inclusion as a central goal hold the potential to offer more efficient and resilient payments; enhanced safety and trust in digital financial services; and inclusion in digital financial services for all, especially disadvantaged and vulnerable groups.
At the same time, Central Banks deploying CBDCs need to carefully consider a number of key policy and design questions including the appropriate balance of privacy and financial integrity; the role of the private sector in implementation and mitigating the risk of disintermediating the banking sector; and how to ensure last-mile access so that CBDCs do not have unintended consequences such as widening the digital divide.
It is already clear that CBDCs will be part of the future financial system design and now is the time to ensure financial inclusion is embedded into the design thinking and early-stage experimentation in this arena. This means ensuring accessibility, appropriate levels of consumer protection and education, and concerted efforts to overcome digital divides which could hinder the effectiveness of such technological innovations.
As members of AFI move forwards in this journey, dialogue and knowledge generation is crucial. As research, piloting and deployment takes place, it will be vital to capture and learn from experiences and have platforms that bring all key stakeholder groupings together, from both the public and private sectors, advanced and developing economies.
As next steps, we hope to continue partnering with member countries in enhancing and/or development of innovative policy solutions on specific areas by sharing practical experiences through peer-to-peer learning platform and develop knowledge that will advance the work on this important priority area identified by the AFI members.
Thank you, and I wish you a fruitful workshop.