Reserve Bank of India Deputy Governor Addresses SAARCFINANCE Seminar on Digital Technologies in Central Banking

 

In a keynote address at the SAARCFINANCE seminar on Emerging Digital Technologies in Central Banking and Finance held in Goa on January 17, 2024, Deputy Governor Michael Debabrata Patra of the Reserve Bank of India (RBI) highlighted the significant opportunities and challenges presented by the rapid adoption of digital technologies in central banking.

Key Points:

1. State of Play:

   - New-age technologies such as APIs, AI, ML, biometrics, cloud computing, and DLT are transforming the financial sector globally.

   - Central banks are re-engineering processes, adapting operations to citizen demands for speed and convenience, and expanding oversight to address emerging risks.

2. Opportunities:

   - Data-driven policy making is enhanced by AI and ML, providing meaningful analyses and insights for policy formulation.

   - Digital technologies aid economic forecasting, such as the Billion Prices Project for improving economic indicators.

   - RegTech and SupTech tools streamline regulatory compliance, reducing costs and ensuring adherence to frameworks.

3. Cross Country Experience:

   - Examples from advanced and emerging market economies highlight diverse applications of emerging technologies in central banking.

4. Indian Experience:

   - RBI's comprehensive adoption of emerging technologies, including big data analytics, AI, and ML across monetary policy, research, and data management functions.

   - Pioneering initiatives in digital financial inclusion, payments, and settlement systems, with ongoing pilots for CBDCs.

5. Challenges:

   - Concerns about transparency, data biases, cybersecurity, digital financial exclusion, and the potential fragmentation of the financial world.

   - Striking a balance between benefits and risks, emphasizing the need for strengthening capacity, updating legal frameworks, and expanding consumer education.

Conclusions and Way Forward:

Deputy Governor Patra emphasized the importance of learning from each other's experiences within the SAARC region, envisioning the interlinking of technologies, and embracing innovation while being mindful of risks. The seminar serves as a platform to exchange ideas and practices for the future of digital technologies in central banking.

In Closing:

Deputy Governor Patra concluded by quoting Stephen Hawking, cautioning about the significant impact of creating artificial intelligence and the necessity to manage associated risks effectively. The seminar aims to illuminate the path forward in the evolving landscape of digital technologies in central banking.