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Bali Fintech Agenda launches global guideline

The more, the merrier: Finance Minister Sri Mulyani (second right, front row) joins a group photo with participants of the G20 Finance Ministers and Central Bank meeting in Nusa Dua, Bali, on Wednesday

Dewanti A. Wardhani (The Jakarta Post)
Nusa Dua, Bali
Fri, October 12, 2018

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Bali Fintech Agenda launches global guideline

T

he more, the merrier: Finance Minister Sri Mulyani (second right, front row) joins a group photo with participants of the G20 Finance Ministers and Central Bank meeting in Nusa Dua, Bali, on Wednesday. (JP/Zul Trio Anggono)

As financial technology (fintech) continues to advance rapidly, a push for updated regulations has prompted the International Monetary Fund and the World Bank to establish a set of policy guidelines for regulators across the world.

The Bali Fintech Agenda launched by the IMF and World Bank has been put forward as the guideline for policymakers to find the delicate balance between supporting the fast moving fintech industry and allow it to innovate and flourish, and protecting consumers from the inherent risks that come with new technologies.

The guideline consists of 12 policy elements aimed at helping countries harness the benefits and opportunities of fintech, while at the same time also managing the risks that arise.

President Joko “Jokowi” Widodo, who gave a speech during the launch of the agenda in Nusa Dua, Bali, on Thursday, called on policymakers not to rush when regulating fintech so as to allow innovation and experimentation to flourish.

“Innovation comes from experimentation and many — or even most — experiments fail, that is the nature of experimenting. To punish failure is to discourage experiments, and without experiments there simply cannot be innovation,” Jokowi said.

Jokowi went on to say that restrictive regulations would drive economic activities further away into cyberspace, where it is out of regulatory reach.

Therefore, he said, openness to global standards and platforms was merely a realistic choice, and that cooperation between countries was needed.

“In Indonesia, we have to admit that we still have much work to do to disseminate these realities and the pragmatic need for openness in our own bureaucracy. But I hope that we can all help each other to promote openness to global standards and global platforms,” Jokowi concluded.

IMF managing director Christine Lagarde said the 12 key elements in the Bali Fintech Agenda were produced jointly with the World Bank in order to alert member countries to items they need to examine in their own policies.

She further said the IMF had two priorities it aimed at achieving from the agenda, namely to increase financial inclusion and make sure financial stability is not damaged.

World Bank president Jim Yong Kim said through the Bali Fintech Agenda, its mission was to end poverty and make sure everyone can benefit from the innovations of financial technology. Downside risks, meanwhile, can be managed with good policies, he added.

Kim acknowledged that the World Bank was grappling to keep up with the rapid developments taking place in the fintech industry.

“With this huge potential, universal access to financial services by 2020 — one of our goals — will not happen without deeper and deeper engagement with technology,” he said on the same occasion.

Finance Minister Sri Mulyani Indrawati, who also attended the launch, said many countries across the world — Indonesia included — are facing a dilemma as fintech continues to develop.

The question, she said, was how regulators would embrace, enable and foster the new technology while at the same time making sure it does not severely disrupt and damage social and economic stability.

Sri Mulyani explained that the digital age is an important time for many countries, as it becomes increasingly difficult to distinguish between financial institutions and technology services, and therefore questions arise on what kinds of regulations, taxation policies and data protection principles were needed in order to maintain a delicate balance.

“[The Bali Fintech Agenda] is going to help many countries to have at least an idea about a policy framework and be more optimistic in seeing technology not as a threat, but as an opportunity to move forward,” Sri Mulyani said.

Separately, digital supply chain platform TokoPandai cofounder and CEO Reza Maspaitella expressed hope that cooperation between regulators and industry players would allow for more innovation to take place and accelerate.

He also lauded the Indonesian authority’s openness, such as Bank Indonesia and the Financial Services Authority’s regulatory sandbox, which would help maintain the balance between managing the risks and reaping the benefits of fintech.

Similarly, peer-to-peer fintech lending platform Investree cofounder and CEO Adrian Gunadi said the global regulatory guidance would provide a standard to define and approach fintech companies and innovation.

“It would thus make it easier for us to expand to new markets and help cooperation between fintech companies operating in different markets,” he said.


Bali Fintech Agenda

1. Embrace the promise of fintech;

2. Enable new technologies to enhance financial service provision;

3. Reinforce competition and commitment to open, free and contestable markets;

4. Foster fintech to promote financial inclusion and develop financial markets;

5. Monitor developments closely to deepen understanding of evolving financial systems;

6. Adapt regulatory framework and supervisory practices for orderly development and stability of the financial system;

7. Safeguard the integrity of financial systems;

8. Modernize legal frameworks to provide an enabling legal landscape;

9. Ensure the stability of domestic monetary and financial systems;

10. Develop robust financial and data infrastructure to sustain fintech benefits;

11. Encourage international cooperation and information-sharing, and;

12. Enhance collective surveillance of the international monetary and financial system.

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