Sign Michigan Banking Living Will Mobile

Industry sign banking michigan living will mobile

and good evening it is really an honor to be at the central bank of the future conference sharing the stage with so many prominent speakers and panelists i would like to thank the organizer the university of michigan center on finance law and policy and the federal reserve bank of san francisco for inviting me to this conference and allowing me to share my view on evolving role of central bank from a developing country perspective since the global financial crisis 2008 the world has never been the same the damage left by the crisis goes beyond financial aspect rating far deeper to the fundamental of our regulatory framework economic models as well as our society in the pursuit of profit and advantage imbalances and inequalities were largely ignored exponential growth of people who think they will be worse off than their parents widening disparity between growth between metropolis and regions educated and uneducated this year kobe 19 pandemic has further deepened this divide with the most severe impact seen on daily wage earner low income families and small and medium businesses in developed countries and to a stronger extent developing economies as societies become polarized anger frustration trust deficit in the regulator public institutions and the media become common seen in this regard it is not surprising that a trust protocol like blockchain technology that allowed the transfer and storage of assets of value independently from this institution was popularized in 2008. so in the middle of this development what has the national bank of cambodia learned there are many but two are particularly striking to me and that is inclusiveness and restoring trust and confidence as a central bank we can do our part in building an inclusive and trustworthy financial system as part of the association of southeast asian nation cambodia's economy enjoyed significant growth in the past two decades averaging around eight percent as of 2019 the size of our economy is around 25 billion us dollars driven largely by five major sectors such as tourism a textile export construction agriculture and banking sector in 2020 duty depend due to the pandemic the economic protection is bleak and as in everywhere else and expect it to contract by minus 1.9 percent cambodia achieved significant progress in reducing poverty rate from 53 percent in 2004 to around 13 percent in 2019 the undp warned however with this year pandemic cambodia could see its poverty rate double the banking sector has also been developing rapidly with critic growing around 25 on average in the past five years in 2019 a financial sector in cambodia has grown very interconnected domestically and internationally this was in the case 10 years ago as such it is now more exposed to external shock a shift in the policy rate by the federal reserve system and for instance can affect the liquidity markets in the region and therefore in cambodia and this situation is made even worse when more than 90 percent of the economy is dollarized rebuilding the trust and confidence of the people on the national currency the real is therefore our priority without the use of local currency our monetary policy tools are limited and could put us in a vulnerable position in case of a financial crisis in terms of inclusiveness only 50 percent of the young adult population have access to formal financial services leaving the other half lacking basic financial services or exposed to a usury practice of the informal sector now obviously maintained price stability and financial stability is the national bank of cambodia's main objective but financial stability is better maintained when the system is inclusive and well diversified here one should also be cautioned that too fast financial inclusion could have negative impact on financial [Music] stability and this is a lesson learned from the last gfc too easy too fast access to credit can be counterproductive nevertheless financial inclusion hold the promise of boosting growth and reducing and inequality notably by mobilizing saving and providing household and firms with greater access to resources and the inclusive financial system is understood to provide better opportunities for economic agent to better manage its cash flow smooth spending over time and potentially grow existing business and eventually graduating from a small enterprises to a large in the price for low income segment access to financial services can improve their living standards lift them out of poverty and provide better education and health care for their family nonetheless according to the world bank financial inclusion remain a challenge in many countries due to regulatory barriers limited financial literacy and inefficient banking system research and policy debate on how countries should promote financial inclusion remain essential it is true that for some country financial inclusion is considered as an important tool to reduce poverty by the united nation it's considered a developmental task and not a financial stability task but as a central bank we don't exist in silo our price stability and financial stability should be maintained in order to contribute to economic growth but economic growth without improving the life of the people at large is meaningless in this regard the national bank of cambodia made financial inclusion its missions in 2019 um the national financial inclusion strategy was endorsed by the royal government in line with its poverty reduction objective financial inclusion should be addressed from both the supply side and the demand side with the later ones often neglected financial literacy and consumer protection should be prioritized or at least be providing equal importance as other measures suggest access to quality affordable and transparent financial products in cambodia beside the various leaders financial literacy campaigns our central bank and the ministry of education are working to embed financial literacy into the general education program for students from grade 1 to grade 12. and prior to kovic 19 we were expecting to roll out this program to in 2021 and now there's going to be a bit of a delay for that the national bank of cambodia has also set up helpline to address public questions and complaints regarding financial services these helplines are intended to better understand challenges to financial inclusion's effort but also to build trust and a relationship between the central bank and the public in the pursuit of bringing the remaining 50 percent of the population into the formal banking sector the national bank of cambodia embarked on a project called bakung a name after the first highland temple built in the 7th century the temple for many cambodian is a symbol of independence and sovereignty access to credit insurance or deposit requires certain precondition from the users credit worthiness regular income and spare savings but payment transactions happen every day for low and high income people therefore bringing the excluded population to access payment services would be a good beginning indeed access to digital payment would create a cash flow history for the customer that would later allow financial institution to better assess the credit worthiness of the consumer and establish a relationship with that customer use of data here is crucial for low-income segment and of the market and the farmers in developing countries who lack basic official documentation capitalizing on the high mobile phone penetration with 20 million mobile phone subscription for a population of 16 and a half and thanks to a inclusive regulatory framework mobile money transfer and mobile payment were rapidly developing during the past seven eight years in cambodia as the central bank enabling private innovation through issuance of enabling regulation is critical but depending on the specific specific content central bank should also provide basic infrastructure for the private sector to strive in the absence of an rtgs system the national bank of cambodia provide basic infrastructure such as the national clearing system fast system which is a real-time account to account fund transfer the cambodian share switch a standardization of chip standards that allow atm and pos interoperability a com project is delight the latest adoption that allow interoperability between e-wallets and bank account holders the effort is intended to bring convenience and affordability to end users it is also intended to breach the urban population who mostly hold bank accounts and the rural population who mostly have e-wallets account e-payment enables small microfinance institution to reduce its operational costs on repayment collection where somebody will go on a motorcycle and collect payment from the villages and allow any neighborhood shop acting as banking agent to kill on their behalf furthermore the increased usage of digital payment is expected to help the use of local currency where despite its relative stability against the us dollars usage remain low and most of them due to the loss of the notional value of the currency inconvenience cited as there's too many zero or there's too many banknotes to carry an efficient and interoperable payment system is also expected to contribute to better tax collection eliminating leakages that cash transactions could pose and in particular during the period of pandemic it could help reduce the spread of the covet through cash handling and facilitate government cash assistance to the poor but how does bacon work exactly now contrary to what has been raised by the media cambodia is not issuing a central bank digital currency although technology features have some similarities um legal and accounting treatments um however are somewhat different background is intended as a backbone payment system the national bank of cambodia does not issue new money through background but merely exchanges fiat money against the digital version of it anyone in cambodia with a local mobile phone number and a smartphone can download the application and register oneself with participating financial institutions and once registered the person become the customer of that of the bank then the bank will have the full visibility of the transactional data of this customer and has the responsibility to do the unnecessary kyc on this person now with great power comes great responsibility and the central bank has opted out from getting personal data from the users and and so the information solely lay with the commercial banks or the payment service providers customers of participating financial institutions banks and payment service providers can now send money to each other to each other by gom's wallet free of charge using a telephone number as an identifier in addition users can also transfer fund from their backgrounds wallet into other participating members bank account or wallets account free of charge we are now taking a phase approach integration so with full integration expected next year and users may not even have to use background wallet as a manual transition uh cross institution fund transfer would be a trade straight through processing through the background engine itself and also many have questions about the choice of the technology used in our case and background uses the iroha hyper ledger that allow a peer-to-peer transfer and that was code and so the technology was co-developed with a japanese company suramitsu i personally was not very interested in the dlt or blockchain technology but the peer-to-peer functionality was the main requirement and this is because we needed to integrate two different industries together for the banking industry it was already integrated through the fast system cleared by our national clearinghouse and to be able to participate in a clearinghouse banks must open a settlement account and have a standby liquidity line with the central bank and maintain a certain standard of liquidity management however if we were to include payment service provider in the national clearinghouse the same level of due diligence must apply and this could be difficult as payment service providers are technology companies and we can't expect them to reach that same standard of liquidity management as banks and in fact um it would be counterproductive as regulatory compliance costs will be passed on to the end users so in this regard a peer-to-peer solution makes sense for our in our contacts the absence of a central clearinghouse and the immediate finality of the transaction allowed by the technology means that payment service providers don't have to worry about liquidity management at the clearinghouse level here i would like to stress that the choice technology would serve should serve the problem that ones want to solve and not adding more problem and furthermore it is critical that the central bank have the internal human resources to understand the technology used and there is no point buying your two-seater's ferrari when you don't have a driving license and i was often asked why choosing a small company for such a national project and perhaps naively i responded and that's because my team understand that particular language of this technology better than that is and therefore allow more control over it as my time is limited i would like to conclude my remark by emphasizing the role of the central bank has evolved from pure price stability but also price but also financial stability and financial inclusion central bank should build an inclusive financial system and aspire for trust and confidence from the public enabling regulations and provision of basic infrastructure are critical to stimulate competition in innovation as a central bank from a developing country the national bank of cambodia has been very pragmatic on its approach to financial inclusion and trust building and there is no one-size-fit-all each central bank must understand its own challenges and opportunity bearing in mind that technology can help small countries to leave frog's many developmental steps then as far as the national bank of cambodia is concerned the central bank digital currency is a long way ahead but we won't exclude the possibility should the need arise eventually thank you for your attention you