The International Monetary Fund and the World Bank Group today launched the Bali Fintech Agenda, a set of 12 policy elements aimed at helping member countries to harness the benefits and opportunities of rapid advances in financial technology that are transforming the provision of banking services, while at the same time managing the inherent risks.
The Agenda proposes a framework of high-level issues that countries should consider in their own domestic policy discussions and aims to guide staff from the two institutions in their own work and dialogue with national authorities. The 12 elements (see table) were distilled from members’ own experiences and cover topics relating broadly to enabling fintech; ensuring financial sector resilience; addressing risks; and promoting international cooperation.
“There are an estimated 1.7 billion adults in the world without access to financial services,” said IMF Managing Director Christine Lagarde. “Fintech can have a major social and economic impact for them and across the membership in general. All countries are trying to reap these benefits, while also mitigating the risks. We need greater international cooperation to achieve that, and to make sure the fintech revolution benefits the many and not just the few. This Agenda provides a useful framework for countries to assess their policy options and adapt them to their own circumstances and priorities.
“The Bali Fintech Agenda provides a framework to support the Sustainable Development Goals, particularly in low-income countries, where access to financial services is low,” World Bank Group President Jim Yong Kim said. “Countries are demanding deeper access to financial markets, and the World Bank Group will focus on delivering fintech solutions that enhance financial services, mitigate risks, and achieve stable, inclusive economic growth.”
Mrs. Lagarde and Dr. Kim presented the Agenda in a panel discussion today during the Annual Meetings in Bali. They were joined by Sri Mulyani Indrawati, Minister of Finance of Indonesia; Lesetja Kganyago, Governor of the South African Reserve Bank; and Mark Carney, Governor of the Bank of England and Chair of the Financial Stability Board.
With their near universal membership, the Fund and the Bank, are well positioned to gather information from all countries and to reflect on their respective needs and objectives at various levels of economic and technological development. They both also offer a forum for sharing the experience of countries that are not members of international standard-setting bodies on issues such as combating money laundering and terrorism financing, market integrity, and consumer protection. The Financial Stability Board and several other international standard-setters have been reviewing the implications of fintech developments and have indicated regulation and supervision priorities.
The IMF and World Bank will start developing specific work programs on fintech, as the nature and scope of their members’ needs become clearer, in response to the Bali Fintech Agenda. The IMF’s initial focus will be on the implications for national and global monetary and financial stability; and the evolution of the International Monetary System and global financial safety net.
In response to the Bali Fintech Agenda, the World Bank will focus on using fintech to deepen financial markets, enhance responsible access to financial services, and improve cross-border payments and remittance transfer systems. The Bank will draw on the International Finance Corporation’s growing experience in this area. The Agenda contributes to building the foundations of the digital economy that is a key pillar in the World Bank Group’s larger disruptive technologies engagement.
Executive Board Statement
IMF Executive Directors welcomed the opportunity to consider the Bali Fintech Agenda, and praised the excellent ongoing cooperation between the Fund and World Bank staff in this area, along with other international bodies. Directors broadly endorsed the Agenda as a framework for the consideration of high level fintech issues by individual country members, including in their own domestic policy discussions. They recognized that the Agenda does not represent a work program for the Fund and World Bank Group. Directors concurred that the elements of the Agenda have broad relevance to all member countries and that national authorities should tailor the application of these elements in light of their specific circumstances. This would help reap the benefits of fintech while remaining vigilant about the potential risks and enhancing preparedness to address them. Directors also noted that the elements of the Agenda could apply to both conventional and Islamic financial instruments and products.
While recognizing the rapid pace of fintech development and its uncertain impact, Directors concurred that fintech offers wide ranging possibilities in deepening and enhancing the efficiencies of financial systems, broadening access to financial services—especially in low income countries and for underserved populations—and supporting broader economic development and inclusive growth. They acknowledged the potential risks posed by rapid technological changes to financial systems and individual users and stressed the need for adequate preparation and cross agency coordination by national authorities, including through strengthening of institutional capacity, building up knowledge, improving communication with stakeholders, and expanding consumer education. Directors called on the Fund to stand ready to provide technical assistance, particularly for countries with significant capacity gaps, while facilitating information sharing.
Directors generally considered the elements of the Agenda as broadly balanced in pointing out opportunities while acknowledging potential risks of fintech. They agreed on the need to strike the right balance between enabling financial innovation and reinforcing competition and the commitment to open, free and contestable markets on the one hand and addressing challenges to financial integrity, consumer protection, and financial stability on the other.
Directors broadly agreed on the need to augment regulatory and legal frameworks to support the sound development of fintech services and safeguard financial systems. They called for close international cooperation and coordination to address regulatory gaps and prevent the potential risk of a race to the bottom in regulatory compliance, including Anti-Money Laundering/Countering the Financing of Terrorism compliance and the spread of global systemic risks.
Directors called on staff to work closely with the standard setting bodies (SSBs) and relevant international bodies, while avoiding duplication and overlap. They encouraged staff to continuously monitor and analyze fintech developments and consider their implications within the Fund’s mandate, focusing on analytical and country work with respect to cross border capital flows, financial integrity, national and global monetary and financial stability, and the evolution of the International Monetary System and global financial safety net.