Central bank governors from Commonwealth countries backed a proposal to create a toolkit that will help banks leverage technological innovations in the finance sector to maximise economic growth.
At the Commonwealth Central Bank Governors meeting held this week in Bali, Indonesia, Commonwealth experts outlined plans for a toolkit on financial innovation, also known as ‘Fintech’. The aim is to embrace the rapid pace of Fintech, while ensuring it is properly regulated in member states.
The package will include model laws on cybersecurity and bankruptcy, amongst others, which countries can tailor to their specific needs. A Commonwealth regulators’ directory to support collaboration across agencies, as well as tactics to attract investment for innovators are also planned.
The Governor of the Eastern Caribbean Central Bank, Timothy Antoine, opened the meeting. He described the rise of new technology such as smartphone banking apps, peer-to-peer lending, digital wallets, crowd funding, and crypto-assets as “breath-taking”.
“Central banks ought to be both responsible and responsive, cognisant that the adoption speed of Fintech and its appropriate regulation will, to large extent, depend on the response of regulators like ourselves,” he told participants. “To that end, central banks should choose to lean in and help shape the orderly development of Fintech rather than lean back and adopt a wait and see attitude.”
Delegates from Kenya, Jamaica, eSwatini and the Eastern Caribbean States shared country experiences with Fintech, citing concerns about cybersecurity and data protection, limited internet access, and lack of expertise in tackling various risks.
“We support the toolkit, particularly because we have ventured into an area that we do not know so much about,” said the Governor of the Central Bank of eSwatini, Majozi V. Sithole. “If [a country] has learned something or can come up with successful lessons, it would be good to be shared.”
“We have problems with regulation, [faced] by all the countries. We can sit together and have contributions on this from all the countries – it will be important to build one model,” added the Head of International Relations at the Central Bank of Mozambique, Elsa Chambal.
The Head of the Small States Office at the Commonwealth, Travis Mitchell, welcomed the outcome of the discussions. He said the next step is to secure resources to create a robust toolkit that responds to the needs of member countries.
The outcome of the discussions will feed into the Commonwealth Finance Ministers’ Meeting on 11 October.