The weekend of April 12-14 marked the World Bank and International Monetary Funds’ Spring meeting on the global economic agenda. The spring meeting this year brought together ministers of finance from the member countries as well as central bank governors to discuss issues of global economic development such as digital economy, financial inclusion, financial technology, and tax policy. The meeting also gathered stakeholders from the private sector, civil society organizations, and academia to various seminars, discussions, and workshops in Washington DC.
Public attention gravitated towards the topic of future technology in the digital economy. The digital economy is projected to create financial through the internet and mobile devices. Technology in mobile devices has transformed financial services. For instance, online payment can be made through a smartphone to make financial transactions faster and easier. As a result, cash usage is significantly decreasing because of the digital currency.
The rapid transformation in the digital economy has impacted the future of cash in many countries. In China, Alipay and Wechat pay are widely used for their simplicity and practicality. These application platforms have changed how people make payments for services or for their daily purchases. companies such as Facebook and Telegram are also trying to explore digital currencies and create their own digital coins. In Sweden for example, only 13% of the financial transactions are settled with cash. Digital currency payment apps such as GrabPay, Go-Pay and OvO are also becoming more popular in many countries in Southeast Asia such as in Indonesia, Malaysia, Thailand with. This trend has become the catalyst for a payment revolution in e-commerce and digital market.
As IMF Managing Director Christine Lagarde mentioned during the “Money and Payments in the Digital Age” panel, there are risks and challenges with financial technologies such as data privacy, regulation, cybersecurity, stability and public trust. These challenges could shake the financial system if regulators cannot provide adequate regulations to maintain stability and trust in the system., there are also some potential benefits that can be explored in digital currencies and digital payments such as opportunities for innovation and marketing.
In order to address the key concerns regarding the risk of digital transformation, the IMF has addressed several points. First, the IMF has pointed out its commitment as a monetary institution to assist countries in providing monetary policies and regulations to maintain financial stability. Second, the IMF would collaborate with both government and the private sector to identify and to mitigate potential risks through partnerships. The IMF will continue to support the digital economy by bringing new innovations and technologies.
Investors facing the challenge of the digital financial system have a legitimate concern about the potential risks to investments in this sector. Despite this, investors should take advantage of the potential benefits in the market with the fast-moving digital technologies of today, especially in developing countries. Finally, government should be able to ensure the stability and trust of the financial system during technological shifts by providing adequate regulation and security. The central bank and financial institutions must necessarily ensure a positive business climate in the digital economy.
The spring meeting has become a reference for the future development of global economic trends and a way to gauge potential policy in many countries. Thus, investors can benefit from this meeting by exploring the opportunities available for learning and discussion.
