## Opening Remarks by Deputy Managing Director Bo Li: Managing Technology in Finance: Global Approaches for the Digital Age

_IMF News, November 10, 2021_

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## Bibliographic details
- Published: November 10, 2021

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### Overview and framing
- Technological change is a long-standing driver of progress in finance, from double-entry book-keeping to ATMs and modern payment systems.
- The digital age has accelerated trends through:
  - Massive capture of detailed data from activities, transactions, and behaviors as the Internet Of Things and mobile connectivity have expanded.
  - Huge increases in computing power enabling Artificial Intelligence ("AI") to perform tasks that normally require human intelligence.
  - Frequent incidents of hacks and resulting loss of service and personal data reported in the news.
- Core regulatory challenge: how to reap benefits (financial inclusion, efficiency, risk management, oversight) while managing financial stability and integrity risks.

### Findings from IMF workstreams (three recent papers)
- General finding:
  - Strong complementarities exist across data, AI, and cyber risk issues, pointing to the need for adapted policy approaches and enhanced cross-border cooperation.
- First workstream — digital economy and data:
  - Data is a valuable, globally portable good.
  - Cross-border data movement requires coherent policies that build trust.
  - Absence of global principles risks deepening digital fault lines and isolating massive data pools, which would be especially costly for smaller and lower-income countries.
  - Recent G7 announcements of key principles for cross-border movement of data are noted as a positive initial step.
  - Benefits: data can power open finance and AI to boost productivity, growth, employment, and finance.
  - Risks: data capture without effective consent by large platforms can create new monopolies and stability risks; balancing individual privacy with protection from cyber attacks is challenging.
  - Implication: these challenges affect growth, stability, and the international system, requiring global cooperation.
- Second workstream — AI and machine learning:
  - Rapid and far-reaching adoption in finance can:
    - Increase efficiency.
    - Improve client experience.
    - Strengthen risk management.
    - Support regulators in prudential oversight and implementation of monetary and macroprudential policies.
    - Enable applications such as more efficient supply chains and lending to previously unbanked small businesses.
  - Risks include opacity, bias, and potential new sources of systemic risk from greater interconnectedness.
  - Policymakers need to confront these issues; the full extent of strengths and weaknesses is not yet completely understood.
- Third workstream — cyber risk:
  - Expansion of data and digital platforms increases opportunities for malicious cyber activity and widens the attack surface, especially in finance.
  - Recent prominence of supply chain attacks and ransomware.
  - Cyber risk is among the top concerns for governments, businesses, and consumers.
  - In finance, threats to data confidentiality and integrity and to the smooth functioning of information systems pose threats to financial stability.
  - Financial systems vary in readiness to manage cyber attacks; international response is fragmented.
  - IMF analysis has identified major gaps which, if addressed, could considerably reduce cyber risk and help safeguard global financial stability.

### Policy implications and recommendations (implicit and explicit)
- Adapt domestic and international policy frameworks to address:
  - Data governance and cross-border data flows.
  - Regulation and oversight of AI and machine learning in financial services.
  - Cybersecurity resilience across financial systems and supply chains.
- Promote enhanced cross-border cooperation among countries and regulators to address risks that transcend national boundaries.
- Build capacity in jurisdictions, with attention to smaller and lower-income countries disproportionately affected by data isolation and weak cyber defenses.
- Consider global principles for managing data to prevent digital fragmentation and safeguard inclusion, competition, privacy, and financial stability.

### Closing
- The speaker looks forward to discussing these topics with the panel of experts during the event.

*Source: Opening Remarks by Bo Li, Deputy Managing Director, "Managing Technology in Finance: Global Approaches for the Digital Age", November 10, 2021.*

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## References

- [Bo Li](https://www.imf.org/en/About/senior-officials/Bios/bo-li)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Cyber Risk and Financial Stability: It’s a Small World After All](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2020/12/04/Cyber-Risk-and-Financial-Stability-Its-a-Small-World-After-All-48622)
- [Towards a Global Approach to Data in the Digital Age](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2021/10/06/Towards-a-Global-Approach-to-Data-in-the-Digital-Age-466264)
- [Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance](https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2021/10/21/Powering-the-Digital-Economy-Opportunities-and-Risks-of-Artificial-Intelligence-in-Finance-494717)
- [Fintech and the IMF](https://www.imf.org/en/Topics/fintech)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/11/10/sp110521-opening-remarks-by-dmd-bo-li-managing-technology-in-finance_