World Bank: Digital Currencies Don't Guarantee Access To Financial Inclusion

JAKARTA - World Bank Lead Financial Sector Specialist Payment System Development Group Harish Natarajan revealed that central bank digital currency (CBDC) does not guarantee access and does not necessarily contribute directly to financial inclusion.

"I think it's more about central bank digital currency (CBDC) as a program, which will definitely bring attention to some of the long-standing issues of lower access and usage," Harish was quoted as saying by ANTARA, Tuesday, July 12.

In addition, some parties can broadly classify CBDC into high cost to solve certain customer segments, high cost for access and use, and lack of attention-grabbing use cases.

Therefore, he believes that these fundamental issues need to be addressed, as part of a successful CBDC launch, and will take the form of developing a general ecosystem that is divided into three categories, in addition to specific CBDC features and ecosystem features.

The first category is the entry of new players and new business and distribution models, which refers to the entry of non-bank players and agent-based services and other models that may be essential, simplified, and tiered customer requirements.

"Any time you want to have an account-based service, I think this becomes important and the lack of it can be a barrier in itself," he said.

On the other hand, Harish said there are strong driving factors that are needed and can come from urgent needs such as population transfers in large countries where there is a lot of rural to urban migration or vice versa, to a or because of a strong government program, which needs to reach a lot of people. recipient in a timely manner.

As such, it makes for an attractive use case for individuals to go digital, and without it, with all the technical sophistication of the facility, he judges no country will achieve the impact of a CBDC on financial inclusion.

The second category is compatibility with various form factors and instruments, which both individuals and businesses are comfortable with. In some contexts, that may mean that a simulated type of structure is needed in such a way that it is accessible via cell phones or other digital tools available to the general population.

He continued, the third category is the protection of our data and privacy which becomes very important, in particular, the protection of privacy data which does not always mean complete anonymity.

"So it's more of a convenience that without proper processing, transaction data is not misused. I think that is the main key point, CBDC and various other technologies can provide various ways to overcome this," Harish explained.