Digital technologies create tremendous opportunities to achieve a more sustainable financial system that supports the SDGs. They have come into much sharper focus since 2015, impacting all areas of finance and development highlighted in the Addis Agenda.
Their promise is plain for everyone to see – they can enable inclusion and wider access to products and services and increase efficiencies, particularly in the financial sector and in public financial management. But like similar transitions in previous eras, rapid technological change also causes “growing pains” and new risks to arise. How quickly and effectively policies and regulatory frameworks adjust will determine their contribution to sustainable development.
The thematic chapter of the 2020 FDSR presents policy options across all action areas of the Addis Agenda to harness the potential of digital technologies for the benefit of people, ensuring that gains are shared widely, and risks managed carefully.
- Take a strategic approach to digital technologies and finance, to provide a common frame of reference for all actors. This can take different forms – as part of a STI strategy, STI roadmaps, a dedicated digital economy strategy, or explicit integration of digital technologies in the broader planning process (e.g. embedded in a country’s integrated national financing framework);
- Put basic building blocks in place today to participate in the digital economy (even if in the future), including: i) prerequisite infrastructure; ii) digital skills; and iii) updated enabling regulatory and policy environments;
- Revisit policy frameworks and the regulatory architecture to respond to the cross-cutting and wide-ranging effects of digital technologies on financing. Silo-style regulation will not be viable when digital technologies, ICT, data, finance, and other sectors interact in myriad ways;
- Maintain a level playing field and ensure that the entry of players that harness the power of big data leads to innovation and diversification, rather than market domination (e.g. big tech in the financial sector) Digital technologies should benefit people not just as consumers, but also in their role as producers and workers;
- Identify labour-intensive development pathways: use of digital technologies that are labour-replacing should not be incentivized when unemployment is a major policy challenge. Preparing for the digital age can be pursued in parallel to supporting ‘traditional’ and more labour-intensive development pathways, in a two-pronged approach;
- Step up global collaboration on digital technologies and finance, to create spaces for peer learning among policymakers and regulators, strengthen capacity support, and facilitate coordinated responses, such as global guidelines and standards.