At the Singapore Fintech Festival 2023, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), presented a compelling keynote titled “The Digital Money And Finance Voyage: A Case For Public Sector Involvement” that delineated the trajectory of digital finance with a strong emphasis on public sector involvement.
Embarking on the Digital Finance Expedition
Her predecessor, Christine Lagarde, gave a speech at the Singapore FinTech Fesitval five years ago, encouraging policymakers to follow the “winds of change” and embark on a digital money voyage by exploring the use of central bank digital currencies, or CBDCs, and fintech.
The journey toward adopting central bank digital currencies (CBDCs) and formulating guiding regulations is well underway. This path, as highlighted at the festival, is expansive with opportunities and yet laden with uncertainties, notably around use-cases.
In the spirit of the festival, the call to action was clear: it’s not a time for retreat but for proactive preparation for the future implementation of CBDCs and related payment platforms. These platforms are being architected to enable cross-border payments, a critical step toward a globally connected financial ecosystem.
Harnessing the Winds of Technological Change
The festival spotlighted the swift pace of change, with AI as a central theme. The impressive adoption rates of new applications, such as ChatGPT, underscore the transformative power of AI in the fintech sector. While various applications took an average of three years to reach 100 million users, ChatGPT took only two months!
The world is changing faster than most imagined.Kristalina Georgieva, Managing Director, International Monetary Fund (IMF)
Navigating the CBDC Waters
With around 60 percent of countries exploring CBDCs, their adoption is poised to address challenges from costly cash distribution in isolated economies to enhancing financial resilience and inclusion. The trajectory of CBDCs hinges on collaborative efforts between policymakers and private sector leaders who are vital in integrating these digital currencies into the broader financial system.
Calling for countries to continue exploring CBDCs, she also announced the launch of IMF’s Central Bank Digital Currency (CBDC) Virtual Handbook a reference guide for policymakers and experts at central banks and ministries of finance.
The New Horizon for Cross-Border Payments
Ms Georgieva emphasised the imperative to reform cross-border payment structures, which are at present expensive, slow, and available to few. As CBDCs advance, the aim is to create new platforms that function as global financial hubs where various economic actors can conduct transactions seamlessly across borders.
Banks and fintech companies are at the forefront. They are building infrastructure to pay each other, and to exchange financial assets on common blockchain networks, she said.
The Catalytic Role of the Public Sector
The public sector’s engagement is crucial in steering this journey. The public sector is also pushing the frontier, including with the help of the BIS Innovation Hub. The Monetary Authority of Singapore is particularly active. Its project Guardian explores platforms to exchange digital money and assets. IMF staff will participate in project Guardian as observers to advise on the implications for the international monetary system.
Its role is to offer guidance and a framework that ensures safety and cohesion in the fintech landscape. It acts not to stifle but to stimulate progress, providing the regulatory ‘compass’ for navigating the fintech waters.
Sailing into the Future
Ms Georgieva’s message was clear: the voyage through the digital financial seas will be long, but the potential payoff—a more inclusive and effective financial system—is clear.
Quoting Marcel Proust, she said, “The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
“That speaks to the strength of the Singapore FinTech Festival, and of all of you gathered here – the strength of many eyes. The power to bring fresh perspectives to problems and challenges old and new. I look forward to continuing this voyage with all of you. Let us sail together,” she concluded.
The Singapore FinTech Festival 2023 is organised by the Monetary Authority of Singapore, Elevandi, and Constellar, in partnership with The Association of Banks in Singapore.
For more info, visit www.fintechfestival.sg.
Main picture credit: Singapore FinTech Festival
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