The introduction of digital payments can facilitate trade and strengthen global economic integration in the CAREC (Central Asia Regional Economic Cooperation Program) region, Report informs, citing Asian Development Bank (ADB) project Financial Technology for Regional Cooperation in Central Asia Regional Economic Cooperation Countries, for the implementation of which the technical assistance in the amount of $750,000 was provided.
"The growing clamor for digital forms of payment, such as central bank digital currencies and “stablecoins”, lies in their potential to enable faster and cheaper cross-border transactions, including remittances.8 Digital platforms could establish regionally linked payment and settlement arrangements, thereby facilitating trade and strengthening global economic integration. Fintech adoption and innovation could improve co-respondent (within and across countries) financial market relationships by enabling greater transparency, increasing speed of execution, and improving information tracking. In turn, fintech has great potential to help advance sustained development and financial inclusion after the coronavirus disease pandemic has passed," ADB says.
Its experts note that the level of fintech development and sophistication, however, differs widely across the CAREC region—the fintech architecture in the People’s Republic of China is at an advanced stage while fintech activities in other member countries remain mostly payments-led, although mature credit solutions are emerging, especially in Kazakhstan. Consequently, the fintech market in CAREC (excluding the People’s Republic of China) facilitated only around $325 million in transaction volume in 2018, much lower than the $2.2 billion in the Association of Southeast Asian Nations (ASEAN) and $1.9 billion transaction amount in East Asia.
"This includes the Kyrgyz Republic, Mongolia, and Pakistan, among others.
"While the majority of the CAREC member countries have rules and regulations for fintech development, mutual recognition agreements are needed to harness the potential of fintech towards deeper regional financial cooperation. The region also trails benchmark regions in promoting regional fintech hubs, which can offer a timely opportunity for regional collaboration among regulators and other fintech players alike. Other major challenges that are beyond the scope of the TA include underdeveloped information and communication technology infrastructure and low levels of digitization of financial systems," the ADB says.