As the role of central banks evolves, innovations that will boost financial inclusion need to be at the forefront of all actions they undertake.
That’s the conclusion of the two-year Central Bank of the Future research project, conducted by the Ford School of Public Policy’s Center on Finance, Law & Policy, with support from the Bill and Melinda Gates Foundation
Led by Ford School Dean Michael Barr and Adrienne Harris, professor of practice, the project convened current and former central bank governors, policymakers, regulators, researchers, innovators, entrepreneurs, consumer and community organization leaders and others. They set out to explore how central banks, entities responsible for policies affecting a nation’s money and credit supply, could leverage technological advances to foster financial inclusion.
The final paper (PDF) summarizes many of the key themes that emerged throughout the project, which include:
- A comprehensive survey of how stimulus payments were delivered using digital technologies that reached under- and unbanked populations
- The role of central banks as utilities and service providers rather than just regulators
- Establishing global definitions of financial inclusion
- The use of artificial intelligence, digital currencies and distributed ledger technologies
- The ways in which new technology players and fintech companies can work with incumbent financial institutions—especially in emerging markets—to be able to perform identity verification to global standards
The final research also makes several recommendations: “Research initiatives should encourage a multidisciplinary approach to financial inclusion and innovation. In particular, leveraging new technologies such as AI and DLT, along with more traditional areas of central banking expertise, will provide the best chance of innovative strategies to advance financial inclusion globally.”
“Financial inclusion ought to be a core mandate for central banks, and I’m excited to see the ongoing work that will emerge from this two-year project with the Gates Foundation,” Barr said.
The project produced an introductory paper, eight working papers, a comprehensive dataset cataloging central bank financial inclusion mandates from around the world, and a “What If?” blog series. Two conferences—in 2019 and 2020—convened experts from around the world to share ideas, case studies, best practices and innovations regarding financial inclusion.
“Fintech firms, big tech, NGOs, and banks are now engaged in financial inclusion efforts. It is crucial that a culture of collaboration is fostered worldwide that encourages central bank innovation alongside private actor input and encourages feedback from consumers themselves,” the project’s authors said.
The final paper was co-authored by three of the Center on Finance, Law & Policy’s student research assistants: Bryan Ricketts, Megan Kelly and Emma Macfarlane.