G20 High-level Principles for digital financial …

1 G20 High-level Principles for digital financial inclusion Tianqi Sun People s Bank of China GPFI Co-chair 1 1 2 GPFI Priorities in 2016 Consistent with the theme of China s G20 Presidency in 2016, Towards the Innovative, Invigorated, Interconnected and Inclusive World Economy , the GPFI continued to work on former Presidencies agenda items and support the implementation of the G20 financial inclusion Action Plan with particular focuses on: digital financial inclusion : Innovation, Supervision and Regulation; Data and Indicators; Reaching the Last Mile: Rural Areas, the Poor, the Youth and the Elderly; financial Consumer Protection and financial Literacy; SME Finance: Diversified Financing Channels.

2 As a key area of financial innovation in this decade, digital finance (fintech) has natural advantages in financial inclusion in light of its characteristics such as sharing, convenience, low cost and easy access. digital financial inclusion aims at harness digital technologies to improve financial inclusion and has drawn increasingly attention of many countries. However, there was no High-level guidance in this field. In their meeting in February, G20 Finance Ministers and Central Bank Governors asked GPFI to produce a set of High-level Principles for digital financial inclusion .

3 3 digital financial inclusion After its Shanghai meeting in March, GPFI set up a technical team to do the drafting work. Team members come from IOs, such as WBG, IFC,OECD, AFI, BTCA, etc. The technical team produced a framework for developing the Principles . The framework has been circulated among G20 twice. The GPFI completed three-round consultations on the draft Principles . We got comments from: G20 members IOs The private sector. non-G20 countries through the help of AFI The deputies, ministers and governors also gave us valuable comments during Sanya, Shanghai, Washington, Xiamen and Chengdu Meetings.

4 4 G20 High-level Principles for digital financial inclusion The technical team incorporated their constructive comments digital gap between the rich and the vulnerable groups, Anti-money laundering and countering the financing of terrorism(AML/CFT), financial exclusion caused by de-risking or de-banking etc. DF overshadowing FI ? Developed country ? After GPFI completed the final draft of G20 High-level Principles for digital financial inclusion , the G20 Finance Ministers and Central Bank Governors endorsed it during their Meeting in July.

5 5 G20 High-level Principles for digital financial inclusion 6 HLPs was endorsed by G20 leaders in September 4-5, Hangzhou Summit, China All the leaders said that: We endorse the G20 High-level Principles for digital financial inclusion , the updated version of the G20 financial inclusion Indicators and the Implementation Framework of the G20 Action Plan on SME Financing. We encourage countries to consider these Principles in devising their broader financial inclusion plans, particularly in the area of digital financial inclusion , and to take concrete actions to accelerate progress on all people s access to finance.

6 We will continue to address, through the FSB-coordinated action plan, the decline in correspondent banking services so as to support remittances, financial inclusion , trade and openness. Communiqu of G20 Summit, September 4-5, Hangzhou, China Agreed documents G20 High-level Principles for digital financial inclusion G20 financial inclusion Indicators (2016 Update) G20 Action Plan on SME Financing: Implementation Framework Working Group Documents --Global Partnership for financial inclusion (GPFI) GPFI 2016 Progress Report GPFI 2016 White Paper.

7 Global Standard-Setting Bodies and financial inclusion The Evolving Landscape 2016 Update to Leaders on Progress Towards the G20 Remittance Target G20/OECD INFE Core Competencies Framework on financial Literacy for Adults G20/OECD INFE Ensuring financial Education and Consumer Protection for All in the digital Age ---Annex of Communiqu of G20 Summit, September 4-5, Hangzhou, China 8 The HLPs includes 8 Principles Promote a digital Approach to financial inclusion Balance Innovation and Risk to Achieve digital financial inclusion Provide an Enabling and Proportionate Legal and Regulatory Framework for digital financial inclusion Expand the digital financial Services Infrastructure Ecosystem Establish Responsible digital financial Practices to Protect Consumers Strengthen digital and financial Literacy and Awareness Facilitate Customer Identification for digital financial Services

8 Track digital financial inclusion Progress Principles alone will not drive progress. After the HLPs are endorsed at the G20 HangZhou Summit, each country are encouraged to develop their country-level action plan and take concrete actions to promote financial inclusion tailored to their specific circumstances such as Digitalize the G2P payments to improve the penetration of accounts and the efficiency of payments. Digitalization of G2P has been implemented in China. Explore the digitalization of fiat currency to improve financial inclusion .

9 Establish a market conduct supervision system, prudential supervision system and license standard on digital finance. 9 Beyond Principles , G20 also call for actions. There are 66 key actions examples in the HLP Fair competition: apply similar regulation standard to similar products from different types of financial service providers. Regualtion should proportionate to risk profile to reduce unnecessary compliance cost. Promote cross-border financial services and facilitate financial service providers to launch international business.

10 Unify the technical standards and improve interoperability among platforms Collaborate with industry to explore the potential of distributed ledger (block chain) technology to improve the transparency, efficiency, security, and reach of wholesale and retail financial infrastructure, allowing for appropriate risk-mitigation and safeguards Encourage providers of digital financial services to self-regulate to a higher standard than required by prevailing law Strengthen AML/CFT with digital finance 10 Beyond Principles , G20 also call for actions.