Role of Emerging Digital Technologies in Central Banking and Finance highlighted at SAARC-FINANCE meet

Posted 01 Feb 2024

Updated 16 Mar 2024

2 min read

Network of Central Bank Governors and Finance Secretaries of the SAARC Region(SAARCFINANCE ) was established in 1998.
- Objective: to share experiences on macroeconomic policy issues among member countries of the region.
Emerging Digital Technologies(EDT) are new-age technologies such as distributed ledger technology, artificial intelligence, application programming interfaces etc

Opportunities provided by EDT for the financial sector
- Data–driven policy-making: helps detect trends and anomalies better and thereby provides useful input for policy formulation.
- Regulatory compliance: Automating compliance processes, conducting risk assessments, and monitoring transactions can enhance adherence to complex financial regulations.
- Design new products and services: Helps central banks to design new products and services to cater to specific requirements like Central Bank Digital Currency.
- Improve efficiency: help eliminate paperwork, streamline operations, and boost employee productivity.

Challenges associated with EDT
- Concerns arise about transparency, data biases, governance, privacy and the robustness of algorithms.
- Cyber risk with the proliferation of fraudulent apps, deep fakes, and mis-selling through dark patterns.
- Fragmentation of the financial world as differing systems can divide user groups and countries from each other.
- Issue of digital financial exclusion as users will not be aware of the advanced products released using EDT.

Almost three-fourths of Indian banks and NBFCs have developed chatbots and virtual assistants.
RBI is working on establishing a cloud facility for the financial sector in India.
RBI Facilitated responsible innovation in the financial sector through initiatives like regulatory sandbox.
NPCI is upgrading India’s fast payment system – the Unified Payment Interface (UPI).

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