Opening Remarks: Rabat Conference on the Bali Fintech Agenda

IMF News, March 13, 2019

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Bibliographic details

• Authors: Tobias Adrian Rabat
• Published: March 13, 2019

Overview and purpose

• Remarks by Tobias Adrian, Rabat, Morocco, March 13, 2019. As prepared for delivery.
• Conference purpose: promote broad discussions and develop a better understanding of how member countries are incorporating the high-level considerations proposed in the Bali Fintech Agenda (referred to as the “BFA”) into national frameworks.
• Emphasis: reap potential benefits of new financial technologies while managing their risks; adjust policy frameworks comprehensively to realize Fintech’s positive potential for society.

Bali Fintech Agenda (BFA) implementation and IMF/World Bank actions

• BFA origin: response to calls by many member countries of the World Bank Group and the IMF for a high-level conceptual framework tying together challenges from digitalization of financial services.
• Post-launch actions:
  • A survey with "more than 100 responses" to provide insights into membership priorities.
  • Survey results, combined with a summary of recent Fintech developments and regulatory responses, to be presented in a formal paper to the Executive Board.
  • Dialogue on Fintech in the context of Article IV consultations and FSAP reports.
  • Ongoing cooperation with standard-setters in their respective areas.

Fintech opportunities highlighted

• Financial Inclusion:
  • Fintech can make payments and credit more accessible (e.g., peer-to-peer networks).
  • Some countries in the region have made enormous strides in mobile payments; others are still catching up.
  • Non-bank firms (telecom operators, lending platforms) are important providers of broader access.
• Cross-border payments and remittances:
  • Potential for large cost savings and time efficiency.
  • New entrants (telcos, Big Tech, other firms) changing banks’ roles in international money transfers.
  • Saudi Arabia and the UAE are noted as spearheading fintech initiatives to facilitate cross-border settlements.
• Central bank digital currencies (CBDCs):
  • Cited Bank for International Settlements survey: "70 percent of central banks are currently involved in — or soon will be involved in — this complex area, with one-third of them now seeing the issuance of CBDCs as likely."
  • Panel discussions to explore costs and benefits of CBDCs and implications for "banking as we know it."

Fintech risks and regulatory challenges

• New risks from technological change and market developments require comprehensive policy adjustments.
• Regulatory perimeter questions:
  • How to regulate new providers and products (e.g., crypto assets, non-bank financial services).
  • Whether to impose relatively high barriers to entry to mitigate unknown risks versus adopting flexible solutions such as regulatory sandboxes.
• Supervisory and data challenges:
  • Classic prudential reporting frameworks must be complemented by new data-collection frameworks covering new entrants and channels; legal bases may not yet exist.
  • Need for robust data infrastructures to address privacy and cyber risk concerns.
• Financial integrity:
  • Mitigate money-laundering risk in new payment channels.
  • Embed adjustments in strong institutional and legal frameworks that guarantee financial integrity.
• Competition considerations:
  • Ensure the new landscape is competitive to realize efficiencies from new technologies.

Policy areas requiring coordinated action

• Improve payments infrastructure to enable greater efficiency.
• Broaden access to, and review the oversight of, infrastructure for new entrants and ensure interoperability of systems.
• Oversee transformation of banking business models due to new technologies.
• Address AML/CFT and stability implications of new products and activities.

Concrete next steps and recommendations

• Three specific steps to begin follow-up on the Bali Fintech Agenda:

1. Jurisdiction-level consultations: begin consultations with all relevant parties (central banks, regulators, private sector) to develop country-specific approaches reflecting comparative advantages and specific situations; priorities may differ (examples: AML/CFT issues; financial inclusion; infrastructure). 2. Regional consultations and cooperation efforts. 3. Commit to sharing knowledge and engaging in more events; pursue a robust program of publications by respective institutions to promote broader knowledge-exchange.

Conference process and outreach

• Conference will reflect on BFA elements’ relevance to each economy, share experiences, voice concerns, explore challenges, and discuss policy approaches.
• Final session: roundtable for participants to share experiences and ask questions.
• IMF–Morocco partnership note: IMF and Morocco have started a broad partnership towards hosting the 2021 IMF Annual Meetings in Marrakesh; this conference is one of many events to build momentum.

Opening Remarks: Rabat Conference on the Bali Fintech Agenda — Tobias Adrian, Rabat, Morocco, March 13, 2019.

References

• Tobias Adrian
• Morocco and the IMF
• Speeches
• PRESS CENTER
• https://www.imf.org/en/home