Varun Resh
Fintech & Emerging Technologies
It was a pleasure to be part of the DMI Symposium organised by the Official Monetary and Financial Institutions Forum(OMFIF). I was in great company, with central bankers, technology experts and financial industry leaders taking to the stage over the two days to explore areas such as sustainable finance, cross border payments, central bank innovation, tokenisation in capital markets and regulation.
From disintermediation concerns and central banks’ role in payment rails to sustainability finance, data and decentralised finance, there’s a lot to unpack from these discussions but here are my three main takeaways:
Central Bank Innovation
When exploring central bank innovation in the digital age, it is important to consider the following themes:
- Climate impact/Sustainability
- Digital Assets
- Data
Climate change risks, physical or transitional, are front of mind. Through decarbonization strategy, green finance instruments and ESG investing, central banks and regulators can effectively manage those concerns. . On the “digital assets” front, designing Central Bank Digital Currencies(CBDCs) in a way that supports better policy outcomes and safer digital access to the public is important. It enables regulators and compliance experts to better address money laundering and illicit activity tracking. Regarding data, fragmentation and restricted access, along with management, pose significant problems for many large organisations, including policy makers. Thus having a modernised approach towards data, coupled with the first two buckets, can help central banks broaden their innovation ecosystem.
Digital Payments in Philippines
On Asia’s payments landscape, it was great to hear from Deputy Governor Mamerto E. Tangonan, of Bangko Sentral NG Pilipinas(BSP). BSP’s focus on digitalisation of payments, especially in remittances and merchants space is an important point to be noted. I’m very much looking forward to analysing the effect of the Digital Payments Transformation Roadmap on remittances and cross border payments in the Philippines.
Future of crypto assets
With the crypto assets market hovering around 2 trillion market capital, concerns around financial instability, consumer protection and illicit activities are increasing. Understanding financial regulators’ approaches and perspectives when it comes to operational resilience and whether private currencies have the attributes of money, is the need of the hour. John Glen’s keynote at Innovate Finance Global Summit on developments around legislation strengthens the importance of crypto assets and stablecoins in the UK economy and a similar approach can also be seen in Hong Kong with HKMA’s discussion paper earlier this year on crypto assets and stablecoins. And last week, the Financial Conduct Authority(FCA) conducted a two day crypto sprint inviting participants from across the industry to collaborate on the future crypto assets regulation.
As the conversations evolved during the symposium, it was natural for sustainability and green finance to be part of the discussion. It was good to observe that sustainability has a seat at the digital assets table from day one and as we include more and more ESG tech and data providers on our marketplace, it helps organisations improve their sustainability posture and access the best in class solutions in one place as an ESG-in-a-box.
As part of the CBDC discussions at the symposium and with our clients, the discussions evolve from use cases, finding the right tech and data requirements to find the right CBDC solution whether you are a Central Bank or a Commercial Bank and what it means for your customers and public when it comes to inclusion, issuance and interoperability.
