[Summary Update] Indonesia Digital Economy and Finance Festival - G20 Indonesia Finance Track
18 August 2022
Indonesia hosted the Indonesia Digital Economy and Finance Festival (FEKDI) in the week of 11 July 2022.1, 2
The salient discussion topics of FEKDI were:
(i) digital economy and finance synergy and collaboration,
(ii) digital currencies,
(iii) economic inclusion and sustainability,
(iv) cross-border payments and green financing, and
(v) (v) policy strategy to stimulate digitalisation for economic recovery.
Key concerns raised during FEKDI included:
- Balancing the fostering and risk management of rapid digital transformation, in particular the digitalization of the payment system and digital financial inclusion as well as the explosive growth of fintech and crypto/digital assets.
- Managing the transition into a low-carbon economy through vehicles such as sustainable finance whilst cognizant of institutional, market, and economic barriers.
The following summarises key thematic takeaways from the event.
Domestic Payments3, 4
- Bank Indonesia, in conjunction with the industry, has implemented three initiatives under Blue Print Sistem Pembayaran (BSPI 2025) - QRIS, BI-FAST and SNAP - making progress towards inclusive and sustainable digitalization.
- Bank Indonesia outlined three commitments to accelerate an integrated digital economy:
- regulatory reform to accelerate consolidation within a healthy, competitive, and innovative payments industry;
- developing interoperable, interconnected, and integrated payment infrastructure; and
- developing safe, efficient, and equitable market practices.
- Interoperability achieved through international cross-border cooperation must be strengthened amid increasing economic and financial digitalisation, while accelerating digitalisation for economic and financial inclusion, remittances, retail trade and MSMEs. This must be underpinned by fast, affordable, transparent and accessible cross-border payments while ensuring security amidst the rise of the financial digitalisation.
- Payment digitalization and cross-border payments have become a priority agenda during Indonesia’s G20 Presidency in 2022, with the G20 and FSB agreeing to expand cross-border initiatives through 2027.
NOTE: As part of a G20 program concerning cross-border payments, the Committee on Payments and Market Infrastructures (CPMI) published a report on “Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments”. This report provides a framework to help payment system operators and authorities understand and evaluate the benefits, challenges and risks of interlinking arrangements. In doing so, it also provides an overview of important trends in interlinking arrangements and adoption of application programming interfaces (API) by payment systems, drawing on recent CPMI surveys. 6
- Bank Indonesia continues to research CBDC and plans to issue a white paper at the end of this year concerning the development of Digital Rupiah. On a global level, central banks have conducted CBDC research and trials based on the unique characteristics of each jurisdiction.
- Objectives of CBDC exploration: (i) providing a risk-free means of digital payment using central bank money, (ii) mitigating the risk of non-sovereign digital currency, (iii) expanding payment system coverage and efficiency, including cross-border transactions, (iv) expanding and accelerating financial inclusion, (v) providing new monetary policy instruments, and (vi) facilitating the distribution of fiscal subsidies.
- Prerequisites for CBDC issuance: (i) a design that avoids creating monetary and financial system instability, (ii) an integrated, interconnected and interoperable (3i) design with financial market - payment system infrastructure, and (iii) the importance of technology during the experimental stage to understand how CBBC could be implemented (DLT-blockchain and non-DLT).
Digital Ecosystem & Community8
- Digital economy and finance are vital components for an accelerated recovery, which requires synergistic, collaborative, and inclusive strategies to establish an inclusive digital-ready community.
- Key aspects of a digital-ready community: literacy; accessibility; skills; and manpower.
Lastly, the G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting also took place during this time. The seven priority and legacy agendas covered include (i) global economy and risks; (ii) global health issues; (iii) international financial architecture; (iv) financial sector issues; (v) sustainable finance; (vi) infrastructure development; and (vii) international taxation. Further details on the discussion and official statement are available in the Joint Press Release and Chair’s Summary. 9, 10
3Payment System Digitalisation for Public Benefit
4Official Kick-Off of Indonesia Digital Economy and Finance Festival (FEKDI) 2022 Towards Digitalisation Policy Synergy
5Fast, Affordable and Inclusive Cross-Border Payments to Accelerate Economic Recovery
6Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments
7CBDC Role in Strengthening Implementation of Central Bank Mandate
8Advancing Digital Economy And Finance: Government And Industry Strategy On Digitalization
9G20 Finance Ministers and Central Bank Governors Attend 3rd FMCBG Meeting in Finance Track
10G20 Finance Ministers and Central Bank Governors Converge to More Concrete Actions Amid Increasing Global Challenges
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