A vision for the future financial system, outlined in a recent BIS paper, envisions a transformative shift towards a user-centric and unified financial ecosystem. The paper describes the concept of "Finternet" as a digital-era financial system that is inclusive, innovative, participatory, accessible, and affordable for all. It emphasizes leveraging innovative technologies like tokenization and unified ledgers to enhance financial services for users.
The authors of the paper highlight three essential components for Finternet: an efficient economic and financial architecture, cutting-edge digital technology application, and a robust legal and governance framework. They suggest that unified ledgers could play a key role in delivering on these components, offering benefits such as greater participation, personalized services, improved speed, reliability, and cost reduction for end-users.
While acknowledging the existing technology to realize this vision, the paper underscores the need for collaborative efforts between public authorities and private-sector institutions to bring Finternet to fruition. It stresses the importance of experimentation to understand and address the challenges associated with implementing such a system.
Furthermore, the paper addresses legal and regulatory considerations surrounding Finternet, particularly in relation to unified ledgers and tokenized central bank money. It emphasizes the necessity of ensuring compliance with existing laws and regulations while exploring novel legal and regulatory issues that may arise.
In the pursuit of this vision, central banks worldwide are engaging in experimentation and exploration of new technologies. For example, the Brazilian central bank is exploring the Drex platform, while several central banks have joined forces with the BIS Innovation Hub in Project Agorá to investigate the integration of tokenized bank deposits with wholesale central bank digital currencies on a public-private platform.
The BIS paper serves as a call to action for stakeholders in the financial sector to collaborate, experiment, and innovate towards building a future financial system that is truly user-centric, inclusive, and technologically advanced.
