Over the past two years, the University of Michigan’s Gerald R. Ford School of Public Policy and its Center on Finance, Law & Policy, with support from the Bill and Melinda Gates Foundation, has embarked on an exploration of the Central Bank of the Future. The project convened current and former central bank governors, policymakers, regulators, researchers, innovators, entrepreneurs, consumer and community organizations, non-profit think tanks, and others for two large, public conferences, three private roundtables, and dozens of small group and one-on-one discussions and interviews. The project also produced an introductory paper, seven working papers, a comprehensive data set cataloging central bank financial inclusion mandates from around the world, and a “What If” blog series. The goal of the project was to explore how central banks could leverage technological advances to foster financial inclusion and to provide recommendations for further work to advance this goal.
This paper summarizes many key takeaways from the project and provides a set of recommendations for further research. The paper is divided into five parts. Part I describes how the COVID-19 pandemic underscored existing deficiencies in payment systems around the world and discusses some of the strategies central banks used to respond to the crisis and the impact of those policies on the poor. Part II describes the multiple definitions of “financial inclusion” used by governing bodies around the world and how these competing definitions make it challenging to enact broader global financial inclusion policies. It also provides examples of central banks’ attempts to harmonize definitions, with varying degrees of success. Part III provides an overview of how fintech has changed customers’ expectations; created new risks; and created new opportunities to provide affordable, accessible, and appropriate financial services to those whose needs have not been met. Part IV delves into the regulatory challenges raised by new technology, such as artificial intelligence (AI) and Distributed Ledger Technology (DLT), and offers examples of how central banks could modify regulations to address these gaps in regulation. Part V explores some of the key factors involved in creating a global identification system, based upon learning from national identification systems offered by some central banks. This includes a discussion of anti-money laundering (AML) and other risks. Each Part concludes with recommendations for further research. A summary of the recommendations can be found in Appendix A.