Role of Emerging Digital Technologies in Central Banking and Finance highlighted at SAARC-FINANCE meet | Current Affairs | Vision IAS
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    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(SAARCFINANCEwas 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.

     

    Use of EDT in the Indian financial sector

    • 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).

     

    • Tags :
    • SAARC
    • Emerging Digital Technologies in Central Banking and Finance
    • SAARC-FINANCE
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