• Adrienne A. Harris

The Central Bank of the Future

This blogpost provides an overview of a project sponsored by the Bill & Melinda Gates Foundation and the University of Michigan Ford School of Public Policy to examine the Central Bank of the Future and its impact on financial inclusion.

Persistent economic inequalities within and across nations raise key issues about financial inclusion that demand scholarship and innovative policies to aid in their solution. In response to some of these issues, many Central Banks have expanded their purview beyond their traditional functions of monetary policy, financial institution supervision and payments to also cover financial inclusion. Recognizing this, the Bill & Melinda Gates Foundation partnered with the University of Michigan’s Ford School of Public Policy and the Center on Finance, Law and Policy to establish the Central Bank of the Future (“CBOTF”) project in January 2019.

The goal of CBOTF is to assess the current role of Central Banks worldwide and determine what Central Banks’ future role(s) could be in promoting a more inclusive financial system and economy in the context of a digital world. The project will identify opportunities that Central Banks are uniquely positioned to leverage, including through the adoption of new technology, to foster financial inclusion. More specifically, the project plans to examine traditional Central Bank functions, as well as potential new functions, to identify technologies, processes, and policies Central Banks could use to create a more inclusive economy. In addition, the project seeks to explore the possibility of involving the private and philanthropic sectors in support of these objectives.

Over the life of this project, CBOTF will convene experts for roundtable discussions, organize conferences with international representation, and publish a series of working papers. The final paper will synthesize the project’s two years of findings, making recommendations for how Central Banks, policy-makers, financial market participants and philanthropists can foster financial inclusion in a digital world and create a more inclusive economy.

In July of this year, CBOTF released the first in a series of its working papers (“Paper No. 1”). Paper No. 1 serves as a foundation for the forthcoming papers by introducing a basic understanding of the nexus between Central Banks and financial inclusion. The paper begins by presenting an overview of Central Bank involvement in financial inclusion. In the next section, the paper provides a snapshot of recent contributions to research about Central Banks’ role in promoting financial inclusion. The final section of the paper provides case studies, describing examples of policies and programs developed by a few Central Banks to support financial inclusion. In particular, the Bank of Mexico, the People’s Bank of China, the Reserve Bank of India, and the Bank of Ghana provide useful examples of what Central Banks have done in the space.

Please visit our Central Bank of the Future website to find out more about the project. Paper No. 1 is published here and our forthcoming papers will be as well, along with information about our events.

- Adrienne A. Harris, University of Michigan.

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