RBI Interests in Technology and its Impact on the World Order: T Rabi Sankar
The Reserve Bank of India (RBI) has clearly shown in recent times a great deal of interest and enthusiasm for the transformative potential of technology across various fields, including the financial system. T Rabi Sankar, the deputy governor of the central bank, highlighted the immense impact of fintech on the global financial industry, speaking at the grand finale of the second global hackathon, “Harbinger-2023 — Innovation for Transformation.”
The event recognized and celebrated the outstanding contributions of various tech groups to banks and financial institutions. As we continue to witness the rapid digital transformation of the financial sector, it is clear that the RBI is taking proactive, thoughtful steps to engage with new developments in this ever-evolving technological landscape.
Central Banks and Technology: A Shift of Interest
The recent comments made by T Rabi Sankar, the deputy governor of the RBI, about the increasing participation of central banks, governments, and regulatory bodies in technology marks a significant turning point in the traditional functions of central banks. Historically, central banks have primarily been responsible for monetary policies, currency issues, banking regulations, and supervision.
However, recent years have seen an explosion in technological advancements that have had profound impacts on virtually every aspect of society, and particularly the financial industry. It is therefore not surprising to see central banks like the RBI engaging more with emerging technologies, such as participating in hackathons that encourage technological innovations.
Although technology may fall outside the core functions of central banks, it is becoming increasingly evident that advancements in technology have far-reaching implications for the financial industry and the broader economy. As such, having an IT department within the RBI is a positive step as it enables the organization to stay up-to-date with the latest technological developments in the financial sector. The RBI’s engagement with technology highlights the need for a flexible approach to embracing technological advancements while staying committed to the core functions of central banks.
Technology’s Role in Building Order
The answer to this newfound interest, according to Sankar, lies in the far-reaching impact of technology. While technology undoubtedly facilitates human activities, it also plays a pivotal role in shaping the economic, social, and political orders of the world. Fintech, familiar to us all, has been transforming the financial landscape on a global scale. Additionally, social media has been restructuring political and social orders, highlighting technology’s profound influence.
The Potential of Emerging Technologies
Sankar drew attention to the potential of recent technological breakthroughs, including artificial intelligence, synthetic biology, quantum computing, and robotics. These advancements not only have the capacity to revolutionize human and social lives but also have the potential to reshape the global order itself. In light of this, Sankar appealed to the creators of these technologies to cautiously consider the associated risks.
RBI’s Objective: Guiding Innovation for Financial Well-being
The RBI’s involvement in technology serves a dual purpose. Firstly, it aims to guide innovation to maximize the financial well-being of people and enhance the efficiency of the financial system. Secondly, it seeks to anticipate and proactively counter any detrimental effects of technology that may arise. By actively participating in events such as hackathons, the RBI encourages technology experts to channel their creative energy towards innovative solutions for the benefit of financial inclusion.
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