Central Bank of the Future Project Examines Technology and Financial Inclusion

Introduction

Fintechs, distributed ledgers, payments systems strained by COVID-19 – these are just some of the fast-moving issues that have challenged central banks within the last decade. The central bank of the future must adapt to changing technologies to provide a financial system that works for all. Over the last three years, the University of Michigan’s Center on Finance, Law & Policy (CFLP) and the Bill and Melinda Gates Foundation partnered to explore these and other issues through the Central Bank of the Future project.

The project brought together central bankers, regulators, researchers, community organizations, and other stakeholders to discuss and envision the ongoing transformation of central banks. Its goals were to understand how central banks could leverage technological advances to foster financial inclusion and to provide recommendations for further work.

During the project, two conferences were convened in 2018 and 2019 to bring together global perspectives on the issues facing central banks, and three roundtables provided small-group opportunities for participants to discuss whether central banks could serve as utilities and the growing challenges of climate change. We analyzed lessons from these conferences and combined them with additional research to publish a final summary of major issues and recommendations for further study.

Payment Systems

Payment system design is the area of central bank activity most directly experienced by citizens, who use the payment system every day to shop, pay bills, or receive their income. In most countries, central banks operate at least part of the payment system directly or set the rules for private sector engagement. As payments systems continue to digitize in new ways, central banks have an opportunity to help expand access, increase speed, reduce costs, and provide consumer protection.

We examined examples from Kenya (M-Pesa), China (Alipay, WeChat Pay, and e-Yuan), and ...

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