The UN Secretary-General’s Task Force on Digital Finance has introduced an Action Agenda aimed at demonstrating how digitalization can empower individuals to manage their finances effectively, aligning with the broader objectives of the Sustainable Development Goals (SDGs).
Supported by Germany, Italy, and Switzerland, this initiative unites 17 prominent figures from finance, technology, policy, regulation, and international development. Their mission is to engage with various nations, financial institutions, governments, and civil society organizations to explore how digitalization can accelerate funding for the SDGs.
UN Secretary-General António Guterres emphasizes, “Digital technologies, which are revolutionizing financial markets, can be a game-changer in meeting our shared objectives.” This sentiment is articulated in the UN report titled “People’s Money: Harnessing Digitalization to Finance a Sustainable Future.”
### Insights from the Pandemic
The Covid-19 pandemic underscored the critical role of digital finance in providing the necessary tools for individuals globally to work, transact, and connect. Drawing from the lessons learned, the Task Force has identified key opportunities in digital finance that can facilitate long-term funding for the SDGs:
– Aligning vast capital resources in global markets with the SDGs.
– Enhancing the effectiveness and accountability of public finance, a substantial component of the global economy.
– Redirecting digitally-aggregated domestic savings toward long-term development financing.
– Educating citizens on connecting their spending habits with the SDGs.
– Boosting financing availability for small and medium-sized enterprises (SMEs), which are vital for job creation.
This Action Agenda delineates the requirements for leveraging these opportunities, including investments, innovative capabilities, and governance enhancements, while also addressing the digital risks that could exacerbate financial exclusion and inequality.
### Practical Applications of Digital Finance
Before the formal rollout of the Action Agenda, several Pathfinder Initiatives were established to illustrate its potential impact. For instance, Bangladesh is channeling domestic micro-savings into sustainable infrastructure projects, such as roads and hospitals, to significantly lower capital costs and create economic benefits for underserved communities.
In Zimbabwe, EcoCash, in collaboration with digital investor exchange IEX and UNCDF, is pioneering the world’s first stock exchange that utilizes automated payment data from businesses. This innovation aims to provide reliable credit ratings and facilitate essential financing for growing Zimbabwean SMEs.
Moreover, the Green Digital Finance Alliance has developed a measurement framework to assess the infrastructure, policies, and investments necessary for sustainable digital finance. The insights gained will assist in designing policies that align digital finance with national SDG priorities.
### The Road Ahead
The financial sector has committed over $1 trillion to enhance and consolidate emerging technologies, a trend expected to continue as the industry adapts post-pandemic. The urgency of the situation forced financial institutions to swiftly evolve, often advancing their digital transformation agendas more rapidly than anticipated.
In this context, banks collaborated closely with governments to distribute credit facilities widely, adjust service offerings to meet changing client needs, and implement flexible operational measures.
Maria Ramos, co-chair of the Task Force on Digital Finance, remarks, “We have a historic opportunity to accelerate and expand the transformative impact of digitalization. Digital finance has become a lifeline, empowering citizens by providing them with choices regarding their money.”
Achim Steiner, UNDP Administrator and another co-chair, adds, “The pandemic has revealed digital finance’s vast potential for transformative impact. Digital transfers enable quick government support to those in need, crowdfunding has facilitated medical supply funding, and algorithmic lending accelerates access to capital for small businesses.”
He further notes, “While the rapid development of these technologies is remarkable, it is essential that technological progress is accompanied by sound policies that empower citizens and equip our financial systems to tackle urgent investment challenges as we strive to build a better future.”