BSP says digitalization seen to ease inflation 'in long run'

Jessica Fenol, ABS-CBN News

Posted at Jan 18 2022 11:34 AM

MANILA - The wider adoption of digital payments in the country is seen to reduce costs of production and distribution for businesses, the Bangko Sentral ng Pilipinas said Tuesday

In turn, digitalization is expected to have a positive impact on inflationary trends, the BSP said in a statement. 
 
Inflation in the country hovered above the target of 2 to 4 percent for almost the entire 2021 before easing to 3.6 percent in December. 

“Digitalization is one of the huge changes that will have an effect in lowering the inflation in the long run,” BSP Gov. Benjamin Diokno said. 

 Technological advancements can help keep prices low and stable "over the long-term," the central bank chief said.

For example, digital banks have faster and cheaper onboarding processes because they don't spend on the building and maintenance of physical branches and overhead costs of tellers, it said.

The central bank recently launched a standardized QR code system, making online fund transfers for different banks easier and more efficient.

Economic managers have also said digital payments can hasten cash aid distribution and eliminate corruption. 

The BSP has been actively pushing for technological advancements under its Digital Payments Transformation Roadmap 2020 to 2023 with the goal of digitizing 50 percent of payment and onboarding 70 percent of the population to the formal financial system by 2023.

As of 2020, the share of digital payments to the total financial transactions reached 20.1 percent from 14 percent in 2019 and only 1 percent in 2013, BSP data showed.

With the accelerated adoption of digital payments during the COVID-19 pandemic, Diokno said he is "confident" in meeting the target ahead of time.

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