The design of digital financial infrastructure: lessons from India

BIS Papers  |  No 106  | 
15 December 2019

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with Siddharth Tiwari

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with Siddharth Tiwari and Frank Packer

Digital finance has the potential to transform emerging market and advanced economies alike. India's approach rests on the principle of providing digital financial infrastructure as a public good. It offers an important case study where the results are relevant and applicable for all economies, irrespective of their stage of development. The provision of a national digital biometric identity to all residents has effectively granted them broad access to the banking system. The development of a real-time payment system platform has brought efficiencies to retail customers and small-scale transactions. By providing cheap and instantaneous payment services to ordinary citizens, the design of the Indian payment system challenges the business case for standalone private payment systems. The establishment of a legal framework for data fiduciaries promises to ensure that individuals can readily access the data generated by their online activity and dictate the circumstances for sharing those data.

JEL classification: G28, H41, L15, L17, O33.

Keywords: digital finance, financial inclusion, payment system, interoperability, data privacy, India Stack.