Digital Public Infrastructure can accelerate financial inclusion and close existing gaps in digital financial services, but can introduce risks and exacerbate existing risks if not designed following good principles and global standards, a G20 partnership for global financial inclusion report prepared by the World Bank said.
The report titled “G20 Policy Recommendations for Advancing Financial Inclusion and Productivity Gains through Digital Public Infrastructure” said: “DPI, if well-managed, can lower transaction costs, catalyse innovation, foster competition and interoperability, and enhance user experiences and choice.”
Some of the risks that DPIs could bring include legal and regulatory risks, and insolvency risks, which can endanger the ecosystem at large if some of its critical components were to become financially unsustainable. Financial consumer protection risks could also be heightened by the misuse of DPIs.
The policy recommendations in the report include risk-based regulation, supervision, oversight arrangements for financial sector use of DPIs, and promotion of sound internal governance among others.
The report has cited the example of Aadhaar, which along with Jan Dhan bank accounts and mobile phones, has played a critical role in moving ownership of transaction accounts from one-fourth of adults in 2008 to over 80 per cent now.
Other examples of DPIs include Singapore’s Singpass, the Philippines’ PhilSys, UAE-Pass, and fast payment systems such as India’s UPI, Brazil’s Pix, Turkiye’s FAST among others.
First Published: Sep 06 2023 | 9:50 PM IST