Speech

Introductory Remarks at Global Conference on the G20 Data Gaps Initiative 3 (DGI-3)

June 14, 2023

Good afternoon. Thank you for joining today’s discussion on financial services in a digitalized world.

The rapid pace of technological transformation has created unprecedented opportunities for financial innovation. Digital money and Fintech credit services are reshaping the financial landscape, offering potential benefits for economic growth and financial inclusion.  Already, digitalization has made financial services more accessible and affordable for those who remain unbanked, including the poor, the young, and women.

But this digital revolution also poses challenges for our regulatory and policy frameworks and raises important questions about financial stability. Fintech credit activity outside of the regulatory perimeter is growing rapidly and could lead to more procyclical credit provision. Meanwhile, growing competition could lead traditional banks to lower credit standards and increase risk-taking. And crypto assets are already affecting some emerging market and developing economies with significant holdings of liquid assets that are issued abroad. In some of these economies, domestic currency is being substituted by various forms of digital money, including CBDCs, stablecoins, or other crypto assets. This so-called “cryptoization” can have seriously negative consequences: Broad money and international capital flows could become significantly underestimated, which could in turn undermine the effectiveness of domestic monetary policies and threaten the loss of monetary sovereignty.

Thus, central banks around the world are tasked with ensuring their financial systems remain stable and resilient amid these challenges. Traditional frameworks for conducting monetary policy may need to adapt to effectively address these dynamics.

But what truly lies at the heart of sound policy decisions is the availability of quality data. As the digital economy expands, timely and reliable data becomes even more critical for formulating effective strategies and making informed, evidence-based decisions. Therefore, tackling data gaps in this area is an urgent priority. Here, the G20 can play an important role by improving the formal “accounting” of new forms of money and Fintech credit services, enhancing data availability, and promoting data-sharing frameworks.

Today’s panel of distinguished experts will shed more light on the challenges and opportunities presented by the digitalization of financial services in our economies. They will also discuss the essential role of data for prudent and proactive policymaking, and how we can address critical data gaps in digital financial innovations.

I would like to thank our esteemed panelists for contributing to this important dialogue, and once again thank you all for participating in what I know will be a productive and engaging discussion.