The Bali Fintech Agenda: A Blueprint for Successfully Harnessing Fintech’s Opportunities

IMF News, October 11, 2018

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Canonical URL: The Bali Fintech Agenda: A Blueprint for Successfully Harnessing Fintech’s Opportunities

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Published: October 11, 2018

Overview

Publication: Press Release No. 18/388 (October 11, 2018).
Released by: IMF Communications Department.
Purpose: Launch of the Bali Fintech Agenda, a set of 12 policy elements to help member countries harness fintech benefits while managing risks.
Framing: The Agenda is a high-level framework to guide domestic policy discussions and to inform IMF and World Bank staff engagement with national authorities.

Key findings and motivations

Estimated population without access to financial services: 1.7 billion adults.
Fintech potential: major social and economic impact, especially in low-income countries and for underserved populations.
Core aims: increase access to financial services and financial inclusion; deepen financial markets; improve cross-border payments and remittances.
Need for international cooperation: to ensure fintech benefits are widely shared and to avoid a “race to the bottom” in regulatory compliance.

Institutional roles and planned focus

IMF initial focus:
- Implications for national and global monetary and financial stability.
- Evolution of the International Monetary System and the global financial safety net.
World Bank initial focus:
- Use fintech to deepen financial markets.
- Enhance responsible access to financial services.
- Improve cross-border payments and remittance transfer systems.
- Leverage International Finance Corporation experience and integrate fintech into the digital economy agenda.
Coordination: The Fund and Bank will develop specific work programs as members’ needs become clearer; staff to work closely with standard-setting bodies (SSBs) and other international bodies, avoiding duplication.

Executive Board views and priorities

General endorsement: Directors welcomed the Agenda as a framework for high-level fintech issues and recommended tailoring application to national circumstances.
Balance emphasized: enable innovation and competition while addressing financial integrity, consumer protection, and financial stability.
Capacity-building: Call for strengthening institutional capacity, cross-agency coordination, knowledge-building, stakeholder communication, and consumer education.
Technical assistance: Fund to stand ready to provide technical assistance, particularly for countries with significant capacity gaps.
Monitoring and analysis: Encourage continuous monitoring of fintech developments and assessment of implications within the Fund’s mandate (cross-border capital flows, financial integrity, monetary and financial stability, and the international monetary system).

Risks highlighted

Potential for fintech to:
- Challenge monetary policy transmission and central banks’ roles.
- Amplify interconnectedness, spillovers, and capital flow volatility.
- Enable criminal misuse if AML/CFT measures are not strengthened.
- Create market concentration and regulatory arbitrage if frameworks are not adapted.

Policy recommendations and actions (Annex: The Bali Fintech Agenda — 12 elements)

I. Embrace the Promise of Fintech

Capture wide-ranging benefits (including increasing access to financial services and financial inclusion; deepening financial markets; improving cross-border payments and remittance transfer systems).
Prepare via institutional capacity strengthening, stakeholder outreach, and cross-agency approaches.

II. Enable New Technologies

Facilitate foundational infrastructures (telecommunications, broadband internet, mobile data services, data repositories, payment and settlement services).
Ensure open and affordable access and conducive policy environment to enable efficient data collection, processing, and transmission.

III. Reinforce Competition and Commitment to Open, Free, and Contestable Markets

Ensure level playing field, address market concentration risks, and foster standardization, interoperability, and fair-and-transparent access to key infrastructures.

IV. Foster Fintech for Financial Inclusion and Market Development

Overcome reach, customer information, and commercial viability challenges.
Integrate fintech into national inclusion and financial and digital literacy strategies and promote public–private knowledge-sharing.

V. Monitor Developments Closely

Improve and possibly extend monitoring frameworks.
Maintain ongoing dialogue with industry (innovators and incumbents) to identify emerging opportunities and risks.

VI. Adapt Regulatory Framework and Supervisory Practices

Facilitate safe entry of new products, activities, and intermediaries; sustain trust and confidence; respond to risks.
Modify regulatory perimeters where necessary; keep regulation proportionate to risks; pursue holistic national responses informed by SSB guidance.

VII. Safeguard the Integrity of Financial Systems

Identify, assess, and mitigate criminal misuse risks; strengthen AML/CFT compliance and monitoring.
Use Regtech and Suptech solutions to support regulatory compliance and supervision.

VIII. Modernize Legal Frameworks

Provide legal clarity in areas such as contracts, data ownership, insolvency, resolution, and payments to accommodate technological change.

IX. Ensure Stability of Domestic Monetary and Financial Systems

Consider fintech implications for central banking services, market structure, safety nets, and monetary policy transmission.
Recognize potential for central banks to issue digital currency and improve payments resilience and access.

X. Develop Robust Financial and Data Infrastructure

Build infrastructure resilient to disruptions (including cyber-attacks) and address data ownership, protection, privacy, cybersecurity, operational and concentration risks, and consumer protection.

XI. Encourage International Cooperation and Information-Sharing

Share knowledge, experience, and best practices across regulators and with private sector and public to address cross-border fintech challenges and build global consensus.

XII. Enhance Collective Surveillance of the International Monetary and Financial System

Adapt policies to support inclusive global growth, poverty alleviation, and international financial stability amid rapid fintech-driven change.
IMF and World Bank to support collective surveillance and capacity building in collaboration with other international bodies.

Source: The Bali Fintech Agenda: A Blueprint for Successfully Harnessing Fintech’s Opportunities (Press Release No. 18/388, October 11, 2018).