Digital Payments and Remittances in the times of COVID-19

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00:04 Hello and thank you for joining this webinar.

00:06 I'm Marco Niccoli,

00:07 a senior financial sector specialist at

00:09 the World Bank's Finance Competitiveness and Innovation

00:13 Team for East Asia and the Pacific.

00:16 It is a pleasure to welcome all of you.

00:18 We have connected representatives of central banks and regulators

00:23 in the region.

00:25 Payment system operators and payment service providers.

00:30 International organizations,

00:32 uh,

00:32 colleagues from the World Bank,

00:34 uh,

00:35 consultancies,

00:36 and,

00:36 uh,

00:37 uh,

00:37 also the media.

00:40 We have over 200 registered participants,

00:42 and we thank you

00:44 for your interest in joining us today.

00:48 Today we will discuss digital payments and remittances at the time of COVID-19.

00:54 Uh,

00:55 on the one hand,

00:55 we will address challenges and risks.

00:58 And the measures central banks and regulators are taking.

01:03 On the other hand,

01:04 we will discuss how digital payments can help during these times of crisis.

01:10 Let me then introduce.

01:13 Our speakers for today.

01:16 We have

01:17 connected uh Miss Akima Elalami.

01:20 Uh,

01:21 she's,

01:21 uh,

01:21 uh,

01:22 director of the payment systems and

01:23 instruments oversight and financial inclusion department,

01:27 uh,

01:27 at the Bank Al Magrib,

01:28 the Central Bank of Morocco.

01:30 Thank you,

01:31 Akima,

01:32 for joining us today,

01:33 and it's,

01:33 uh,

01:34 late hours

01:35 for you in Morocco,

01:36 so special thanks for,

01:38 for making the time.

01:41 And then connected from Washington DC

01:43 we have uh our colleague Harish Natarajan.

01:46 He's a lead financial sector specialist in the finance,

01:50 competitiveness and innovation global practice at the World Bank,

01:53 and he leads the global team.

01:55 Working on payments and market infrastructures.

01:59 So we thank

02:01 both our speakers and all our participants.

02:03 And let me then

02:05 leave

02:06 the floor to uh

02:07 Ms.

02:08 Akima.

02:09 To give us an update on what the Central Bank of Morocco

02:13 has been working on in the last

02:16 Few months,

02:17 thank you.

02:18 In Morocco,

02:19 the promotion of electronic payments starts very earlier

02:24 with our first strategic plan in 2003.

02:27 For that,

02:27 we start by

02:29 putting in place modern financial infrastructure

02:32 that could support the development of the affairs on a sound basis.

02:37 We also focused on interoperability,

02:41 which is

02:43 necessary.

02:44 To avoid the fragmentation of the markets and to lead to the augmentation of cost.

02:52 We also introduced some reforms,

02:54 and our latest reforms,

02:57 we introduced a non-bank institution which are allowed to open

03:03 payment accounts and offer the new digital payment services

03:08 like mobile payment.

03:10 The main goal of this reform

03:13 is to introduce new competition in the markets in order to reduce costs for consumer

03:20 and customer and to offer new products which tailored for the needs of people

03:28 with with our financial inclusion.

03:31 Strategy.

03:32 We put the promotion of in the heart of our strategy.

03:37 We launch a mobile payment solution.

03:40 Indeed,

03:41 our roadmap gives

03:43 particular interest to this new channel which offers opportunities for

03:48 the financial inclusion of the different segments of the population.

03:52 Making financial services accessible at a lower cost,

03:57 so mobile payment is natively interoperable

04:01 or operable.

04:02 The user will be able to make a payment or transfer to an individual or a merchant

04:09 regardless of the payment institution

04:11 or the bank issuing the wallet.

04:14 For that,

04:15 with the consultation with all the stakeholders,

04:19 the central bank put in place the common rules first to mitigate the risk,

04:25 the mobile payments,

04:26 and also consumer protection

04:29 against the fraud and other risks.

04:32 We also have capped the interchange fee to lower cost

04:39 and to payment large adhesion

04:40 of

04:42 the merchant to this mobile solution.

04:46 It not only reminded us the importance of

04:49 speeding up the process of implementing this roadmap,

04:53 but also mobile to authorities to undertake specific measures

04:58 relating to financial inclusion and

05:02 free usage of electronic payments.

05:04 Allow me to start by sharing with you the

05:06 experience of our government cash aid given to.

05:10 segment of the population,

05:12 as we know,

05:13 experienced

05:14 during this pandemic has demonstrated that a range of programs

05:18 and transfer modalities can prove effectiveness

05:22 in protecting households in Morocco,

05:25 the government has considered direct transfer

05:28 to protect poorest households operating in formal

05:32 sector

05:33 and Whose professional activities have been affected by the crisis,

05:39 we know that for people living in the ultra poverty,

05:43 such cash support can be a lifeline.

05:46 As soon as the government announced the

05:48 containment measure due to the health crisis,

05:52 thanks to agility of all stakeholders,

05:55 a committee was quickly formed by a different central bank.

06:00 The Ministry

06:01 of the Interior for the qualification of Target population.

06:05 It was a declarative process based on dedicated digital platform.

06:11 In the central bank,

06:13 we coordinate the operation with banks and all the payment institutions.

06:19 We manage operational aspect of distribution

06:23 and the Minister of Economy and Finance,

06:26 uh,

06:26 manage the dedicated funds.

06:29 Therefore,

06:29 thanks to resilient and agile banking infrastructure,

06:34 as well as a fully operational payment system in business community plan,

06:40 the operation was quickly modeled by designation of leading banks.

06:45 Which ensure the link between Interior Ministry and banks.

06:49 And payment establishment for the processing and distribution of eggs.

06:55 The beneficiaries were dispatched by establishments and by

06:59 locality and by day according to the processing capacity

07:04 of each withdrawal point,

07:06 the popularity of the network,

07:08 and the number of beneficiaries by locality.

07:11 This operation has been slid in time.

07:14 Each institution

07:16 has set up a notification.

07:18 system by SMS that are gradually sent to the beneficiary to avoid

07:23 crowd movement

07:24 that will be against sanitary measures,

07:27 and we have served 3 million households,

07:30 and all the beneficiaries were served by ATM

07:35 or government institution branch or a bank branch.

07:38 I will just focus on the idea that the target population

07:41 was covered thanks to the popularity of the physical network.

07:45 And ATMs

07:47 and only small localities remoted

07:50 locality were addressed by mobile agencies.

07:54 In addition,

07:55 Ban

07:55 Marib,

07:56 our central bank,

07:57 continues its efforts

08:00 in close

08:01 collaboration with banks and payment

08:04 institutions to encourage digital payments,

08:06 and particular mobile payments by taking several initiatives.

08:11 Including first,

08:12 making it easier to open payment account remotely

08:17 as in

08:18 until the end of June of this year for QC

08:22 requirements for the opening of Level 2 payment account.

08:26 This payment account is capped at

08:28 $500

08:30 American dollars

08:31 by requiring only a scanned copy of the national identity card.

08:37 And the mobile phone number.

08:38 We also introduced amplification of the enrollment of merchants

08:44 for the acceptance of mobile payments,

08:46 which now can now be made on the basis of

08:49 the production of the sample copy of the national ID,

08:53 the patent number.

08:55 For financial markets infrastructure,

08:58 we have also assisted specifically retail payment system,

09:03 namely the ACH and the SWIT,

09:05 in implementing the necessary measures for their continuity of business,

09:10 particularly in the management of critical human resources

09:15 involved in the payment and the settlement process.

09:18 All of this measure aims to promote the

09:21 use of digital financial services at the best.

09:24 Foundation and support financial inclusion development.

09:28 That's a brief overview of all the measures taken by our central bank.

09:33 But before to finish this brief presentation,

09:36 I would like to focus also on the challenges of this digital financial services.

09:42 With the promotion of DFS,

09:43 we have to deal with many challenges.

09:46 First,

09:46 the lack of the financial education of the targeted population,

09:51 and for that we have to support them by dissemination.

09:54 Creating good practices to adopt,

09:57 explain how they can benefit from governments else,

10:00 protect themselves against fraud,

10:01 and etc.

10:03 We have also to establish a trust

10:06 relationship between institution and target segment,

10:10 and for these targets,

10:11 media channels such as television and radio can

10:15 play an important role in this context.

10:17 The use of DFS also increase the risk,

10:21 such risk of fraud.

10:24 Uh,

10:24 the cybersecurity risk,

10:26 the consumer protection and personal data,

10:29 and also the money laundering and financial and financing terrorism.

10:33 So this is necessary in the central bank

10:37 to have,

10:37 uh,

10:38 and to increase,

10:40 increased vigilance and supervision

10:42 of different actors using financial technology,

10:46 but also work on

10:48 putting in place a good oversight function and to monitor.

10:53 Function within the,

10:54 the central bank.

10:56 I,

10:56 uh,

10:57 I hope it was useful for,

10:58 uh,

10:59 for you,

10:59 and,

11:00 uh,

11:01 if there is any question,

11:02 please,

11:02 uh,

11:03 please go.

11:04 Yes,

11:05 thank you,

11:05 Akima.

11:06 Um,

11:06 I hope you can hear me well,

11:08 and,

11:08 uh,

11:09 uh,

11:09 I,

11:09 we have a couple of questions.

11:11 Um,

11:12 uh,

11:12 one is,

11:13 uh,

11:13 uh,

11:13 from,

11:15 um.

11:16 May I know what payment account constitutes and if this,

11:20 if payment accounts constitute includes credit cards as well.

11:25 And the second question if the measures of Bank of Maghrib

11:31 included revising any transaction transfer limits for mobile money

11:35 for the payment account,

11:36 it's the account that we can,

11:38 the payments institution can offer some financial services,

11:43 include a debit card.

11:45 Not a credit card but a debit card,

11:47 but aren't allowed to

11:51 give credit

11:53 to consumer,

11:54 but just offer payment services to

11:59 for the mobile payment for this payment,

12:01 but It's capped to the level of the payment account and we have the payment account.

12:08 We have two kinds of payment account

12:11 one with $500

12:13 and the second it's capped to around $2000.

12:18 OK,

12:19 thank you.

12:20 uh Aish,

12:20 over to you.

12:23 Uh thank you Marco and thank you Hachima for um

12:26 for giving us a good,

12:26 a good overview of of Morocco.

12:28 Let me start by wishing,

12:29 um,

12:30 many of the colleagues observing the Ramadan,

12:32 Ramadan Kareem,

12:33 and a good morning to,

12:34 uh,

12:34 to everybody.

12:36 Um,

12:36 what I will,

12:37 uh,

12:37 share now is in some sense,

12:39 um.

12:40 An aggregation of all the things that Morocco has done,

12:43 but,

12:43 uh,

12:44 but trying to put it in the framework of,

12:45 um,

12:46 of how we are seeing it,

12:48 uh,

12:48 across different parts of the world,

12:49 and,

12:49 um,

12:50 many of the examples I will quote will,

12:52 will resonate,

12:52 uh,

12:52 with what,

12:53 uh,

12:53 Hakima has been mentioning,

12:54 and that is one of the reasons why

12:56 we invited Hakima to,

12:57 uh,

12:57 to,

12:57 to present.

12:58 And I think they have taken a comprehensive range of actions.

13:02 Um,

13:02 so,

13:03 um,

13:03 I,

13:03 I think,

13:04 uh,

13:04 uh,

13:04 everyone,

13:05 everybody will agree that these are,

13:06 uh,

13:06 very unprecedented times,

13:08 um.

13:09 Uh,

13:09 and a lot of different challenges,

13:11 uh,

13:12 almost everything we do is being impacted,

13:15 uh,

13:15 and,

13:15 in some ways I think payment systems are part of the solution as well,

13:19 as a solution,

13:19 as well as perhaps

13:21 impacted in some ways,

13:22 uh,

13:22 by this crisis.

13:24 So I'm,

13:24 um,

13:25 putting by the theme of my presentation to be getting funds to

13:28 those in need and enabling access,

13:30 and this is based on,

13:32 um,

13:32 uh,

13:32 some of the work we've been doing,

13:34 uh,

13:34 which clearly shows that.

13:36 Um,

13:36 ensuring that people have access to payment services is a critical element of the,

13:41 of the overall crisis response.

13:43 So,

13:43 um,

13:43 what I will be doing is,

13:44 um,

13:45 uh,

13:45 I will talk about,

13:46 um,

13:47 at a broad,

13:47 uh,

13:47 high level,

13:48 what are the,

13:49 what is the impact of the crisis on payment systems and services,

13:52 provide a set of examples on the policy responses,

13:55 and then take two very specific,

13:57 um,

13:58 and,

13:58 uh,

13:58 use cases related to payment services which are

14:01 attracting a lot of attention at this point.

14:03 Uh,

14:04 is the government to person payments or social benefit transfers,

14:06 um,

14:07 as it is generally known,

14:09 uh,

14:09 and,

14:09 and also,

14:10 uh,

14:10 the impact on the remittances market,

14:13 um,

14:13 and I then,

14:13 uh,

14:14 some reflections from my side on

14:16 what could be the implications on the future work of,

14:18 um,

14:19 the World Bank as an institution,

14:20 and I think more broadly

14:21 also the central bank community.

14:24 Um,

14:25 but before I start,

14:26 uh,

14:26 maybe it'll be good to,

14:27 uh,

14:28 revisit some of the terminologies.

14:29 I know many of,

14:30 um,

14:31 the colleagues joining off from the payment

14:32 systems department of the central bank,

14:34 so please bear with me,

14:35 um,

14:36 so that kind of the people who are not familiar with these terms,

14:39 um,

14:39 uh,

14:39 follow,

14:40 follow,

14:40 follow the discussion,

14:41 um,

14:42 um,

14:42 kind of,

14:43 uh,

14:43 uh,

14:44 are able to follow the discussion as well.

14:45 Uh,

14:46 so in,

14:46 in,

14:46 in my discussions whenever I refer to payment service,

14:48 I'm referring to

14:50 services which are used by,

14:52 uh,

14:52 by people like,

14:53 uh,

14:53 you and me,

14:53 uh,

14:54 individuals,

14:55 uh,

14:55 to,

14:56 to kind of make a payment and receive a payment,

14:58 and these include things like,

14:59 uh,

14:59 debit cards,

15:00 uh,

15:01 includes credit cards,

15:02 includes,

15:02 uh,

15:02 prepaid cards,

15:03 uh,

15:04 internet banking transfers,

15:05 mobile money,

15:07 um,

15:07 uh,

15:07 and then also withdrawal of cash at the ATM,

15:09 uh,

15:09 at ATMs at the agent locations,

15:11 and so on.

15:11 So,

15:12 basically,

15:13 uh,

15:13 all of that is classified as payment service.

15:15 And payment system are the centralized infrastructures which

15:18 um allow different participant different financial service providers

15:22 uh to connect and enable

15:24 offer services to uh the customers of another financial institution

15:28 um and then also the um the concept of interoperability uh essentially allowing

15:33 the customer of one particular payment service provider

15:36 to be able to use the transaction channels

15:38 of another provider,

15:39 uh,

15:40 and also being able to send,

15:41 uh,

15:42 and receive money from customer of another provider.

15:45 Um,

15:45 and the,

15:46 the distinction is important between servers and provider system is

15:50 if a particular payment service provider is down,

15:52 uh,

15:52 the payment services offered by them are impacted.

15:55 But if a payment system is impacted,

15:57 then potentially

15:58 all of the payment service providers in the market are impacted.

16:01 Uh,

16:01 and similarly,

16:01 if there's an access channel which is impacted,

16:03 only the customers using that particular access channel are impacted.

16:06 So I think it's important to keep this distinction in mind,

16:09 um,

16:09 as,

16:09 as we talk about it.

16:11 And I'm using the payment system in,

16:12 in a very generic way,

16:14 uh,

16:14 and of course,

16:15 as,

16:15 um,

16:15 as all of us know there is a concept of a scheme,

16:18 uh,

16:18 which are basically the rules based on which the system performs

16:21 and rules based on which the payment service is conducted,

16:24 um,

16:25 and that determines things like what is the fees paid,

16:28 what is the interchange.

16:29 Rate,

16:29 what is the limit

16:31 of the transaction?

16:31 What are the authentication requirements and things like that?

16:34 And those are the rules behind

16:35 a payment service,

16:37 um,

16:37 and the payment system and the scheme put together kind of form the functioning,

16:41 uh,

16:41 of the,

16:41 the overall infrastructure.

16:42 So with that,

16:43 let me move on to,

16:44 uh,

16:44 the core substance of,

16:45 uh,

16:46 what we're discussing today.

16:47 Um,

16:48 we are seeing broadly,

16:49 uh,

16:49 three sets of,

16:50 uh,

16:51 uh,

16:51 different impacts.

16:52 Um,

16:53 the first one is,

16:54 um,

16:54 there's a significant impact

16:56 on the availability of cash and cash-based,

16:59 uh,

16:59 payment services.

17:01 Uh,

17:01 so this includes,

17:02 um,

17:03 getting access to cash from banks,

17:05 bank branches,

17:05 from,

17:06 um,

17:07 uh,

17:07 locations,

17:07 agent locations as we call it,

17:09 uh,

17:10 for remittances,

17:11 for mobile money transactions,

17:13 um,

17:13 and then so on.

17:15 Um,

17:15 so

17:16 at one level,

17:17 while cash impacts kind of individuals,

17:19 uh,

17:19 who,

17:20 uh,

17:20 who are already banked,

17:21 but who,

17:22 who,

17:22 uh,

17:22 wish to transact in cash,

17:24 it impacts them.

17:25 It also impacts people who have access to mobile money,

17:28 who use it for a set of transactions,

17:30 for example,

17:31 but for,

17:31 uh,

17:32 bulk of their,

17:32 uh,

17:33 uh,

17:33 or a set of their other,

17:35 uh,

17:35 needs,

17:35 they use cash,

17:36 and because of that they have to,

17:38 uh,

17:38 activate implications to,

17:40 to withdraw cash.

17:41 It could also impact businesses

17:44 which might be um collecting the digital payments,

17:47 but to pay their suppliers they might have to go and um

17:50 deposit uh go and withdraw cash from their um uh bank branches and give the

17:54 cash to their,

17:56 Uh,

17:56 to their suppliers,

17:57 or it could happen to vice versa that they collect cash,

17:59 have to go and deposit in their bank,

18:01 uh,

18:01 to,

18:01 to be able to pay their suppliers in digitally,

18:04 right?

18:04 Uh,

18:04 so cash impacts both individuals and businesses.

18:07 It impacts people who are banked.

18:09 There's also people who are,

18:10 uh,

18:10 unbanked.

18:11 It,

18:11 uh,

18:11 it affects people with different payment instruments.

18:14 So,

18:14 um,

18:14 uh,

18:15 so just because you have access to a digital payment mechanism like,

18:18 like a mobile money or,

18:19 uh,

18:19 or mobile,

18:20 uh,

18:20 wallets,

18:21 um,

18:21 uh,

18:21 in mobile banking

18:23 doesn't mean that you're not impacted.

18:25 Um,

18:25 and also an interesting point here is,

18:27 um,

18:28 many of the agent locations are,

18:30 um,

18:30 are actually,

18:32 uh,

18:32 in many cases,

18:33 in many countries,

18:33 um,

18:34 uh,

18:34 uh,

18:35 including in Southeast Asia,

18:36 in some countries,

18:37 uh,

18:38 they're actually small grocery shops and,

18:40 um,

18:41 uh,

18:41 corner shops,

18:42 basically.

18:43 Uh,

18:43 the main line of business is something else,

18:45 and they offer

18:46 the aging services,

18:47 um,

18:47 uh,

18:48 as an additional service.

18:50 Um,

18:50 and because of all the social distancing and lockdowns and so on,

18:54 the main line of business might actually be going down,

18:56 uh,

18:56 might have to be shuttered

18:57 because of which they have to also shutter their,

18:59 uh,

19:00 agent services,

19:01 or even if they're open,

19:02 um,

19:02 say for restricted hours,

19:04 the main line of business might actually not see much transactions,

19:07 so they might not have the liquidity to be able to support,

19:10 uh.

19:10 The transactions at these locations,

19:12 and this is something which we have seen

19:13 in many countries now,

19:15 um,

19:15 and,

19:16 uh,

19:16 and this is a big,

19:17 big,

19:17 big,

19:17 big problem,

19:18 uh,

19:18 and it becomes very difficult to enforce because even if the government declares

19:23 these are essential services because of this

19:25 joint,

19:25 um,

19:26 work which is done in the sense that this is not a standalone service,

19:29 but it's offered along with something else.

19:31 Makes it more difficult

19:32 to,

19:33 uh,

19:33 to really enforce it,

19:34 and in particularly in larger countries where the,

19:37 uh,

19:37 uh,

19:37 the law enforcement on the,

19:38 on the ground is the one who's enforcing the regulations,

19:41 or the guidelines from the government

19:42 might not fully understand uh what is essential and what is not essential.

19:46 Uh,

19:46 it is very easy to understand when you say banking is essential,

19:49 you know,

19:49 a bank branch,

19:50 what it looks like,

19:52 but you might not have the same conception for an agent location.

19:55 So I think because of all these factors,

19:56 uh,

19:56 there's a big impact on the availability of cash

19:59 and cash-based payment services.

20:00 There's an added dimension

20:02 where,

20:02 uh,

20:03 there are some

20:04 concerns expressed in some quarters about

20:06 cash being a vector for,

20:08 uh,

20:08 for transmission of the disease.

20:09 Uh,

20:10 this,

20:10 uh,

20:10 this,

20:10 of course,

20:11 this,

20:11 this motion has been

20:13 very strongly countered by,

20:14 by many central banks.

20:16 Um,

20:16 including,

20:17 um,

20:18 uh,

20:18 including the DIS came out of the paper,

20:20 uh,

20:20 contesting this point and,

20:22 and said,

20:23 uh,

20:23 cash,

20:24 there are,

20:24 uh,

20:24 the risk of transmission through physical currency and notes and coins is limited,

20:29 but at the same time,

20:30 um,

20:31 there are,

20:31 uh,

20:31 clear perceptions,

20:32 and,

20:33 um,

20:33 and there,

20:33 there's some kind of a fear in the minds of the minds of individuals and businesses.

20:37 Uh,

20:37 so very clearly that is also demand driving a big demand for,

20:41 uh,

20:41 digital payments,

20:43 um,

20:43 and the demand for digital payments is coming in from people who have

20:47 already had access to it but had not been using it actively,

20:51 or,

20:51 um,

20:52 or,

20:52 uh,

20:52 or they're not fully familiar with the functionality,

20:55 so many of them are learning how to use it.

20:57 Um,

20:57 and in that sense,

20:58 um,

20:59 this is leading to a big jump in,

21:01 uh,

21:01 in digital payments.

21:02 It's also because

21:03 a lot of transactions were perhaps physically done in cash earlier

21:06 are now moving to,

21:07 uh,

21:08 online e-commerce and things like that.

21:10 That also automatically means the payments are also digital,

21:13 uh,

21:13 even if there's cash on delivery,

21:14 uh,

21:15 because of the concerns around cash,

21:16 people are switching to,

21:18 uh,

21:18 the switching to digital payments.

21:20 Um,

21:21 this is,

21:21 of course,

21:22 kind of,

21:22 um.

21:23 Um,

21:23 uh,

21:24 raises a concern whether the system's volumes will be able to take care of them,

21:28 take off this increased volume volumes.

21:30 But the good news is that many of the,

21:32 uh,

21:32 as a,

21:32 as a matter of practice,

21:33 uh,

21:34 the payment systems are,

21:35 are designed for peak capacity,

21:37 um,

21:37 and the peak capacity in many,

21:39 many cases usually 3 times the normal,

21:41 uh,

21:41 transactions.

21:42 So in that sense the systems might be performing at a peak load,

21:45 uh,

21:45 but they're holding up,

21:46 you know,

21:46 that's the general,

21:47 general impression we're getting.

21:49 There is also a drive towards increasing the,

21:52 uh,

21:52 usage of digital payments.

21:53 Coming in from the uh uh from people who are unbanked

21:57 um and who are now forced to switch to digital to carry on their lives

22:01 um and a good portion of that is also coming

22:03 in because the governments are actively in raising digD payments

22:06 uh to provide relief to to individuals,

22:08 and I'll talk about that,

22:09 um,

22:10 in a separate segment.

22:11 The third area,

22:13 uh,

22:13 is that,

22:13 that,

22:14 um,

22:14 there's a heightened concern around the.

22:17 Risks to the smooth functioning of payment and settlement systems,

22:20 uh,

22:21 from,

22:21 uh,

22:21 three different angles.

22:22 One is operational risk,

22:24 uh,

22:24 and this is simply,

22:25 um,

22:26 largely and simply because of the unavailability of critical staff

22:30 to carry out the operations of the systems.

22:32 And this,

22:32 uh,

22:32 crisis is not like,

22:34 um,

22:34 like a,

22:35 uh,

22:35 like a natural disaster where

22:37 you might say that the main site becomes unavailable,

22:39 and,

22:40 uh,

22:40 you can.

22:40 Uh,

22:40 immediately switch operations from the backup side,

22:43 um,

22:44 so,

22:44 um,

22:44 so that you can,

22:45 uh,

22:45 you can,

22:46 uh,

22:46 switch on from a backup,

22:47 backup side,

22:48 uh,

22:48 uh,

22:48 assuming,

22:49 of course,

22:49 that you have the staff to,

22:50 to carry on the operations from there,

22:52 whereas in this crisis,

22:53 the entire nations are being locked down,

22:55 so it doesn't matter whether you have a disaster recovery

22:57 site,

22:58 you have staff there or not,

23:00 uh,

23:00 the physical availability of critical staff becomes an issue,

23:02 uh,

23:03 nevertheless,

23:03 you know.

23:04 Uh,

23:04 and it's not just the staff of,

23:06 um,

23:06 of the institution operating the payment system.

23:09 It is also the critical,

23:10 uh,

23:10 service providers whose staff might,

23:12 uh,

23:13 again be unavailable,

23:13 and this could mean things like,

23:15 you know,

23:15 IT,

23:16 um,

23:17 hardware maintenance guys,

23:18 networking,

23:19 uh,

23:19 and in some cases even catering potentially,

23:22 no,

23:22 um,

23:23 uh,

23:23 and,

23:24 uh,

23:24 there could also be concerns related to

23:26 system capacity,

23:27 as I mentioned,

23:28 um,

23:29 they could also be increasing,

23:31 increasing operation.

23:33 Uh,

23:33 which might be constraining the,

23:35 uh,

23:35 the system capacity,

23:36 um,

23:37 uh,

23:37 and then also giving very little time for

23:39 the IT staff to maintain the systems and,

23:41 and then so on,

23:43 um,

23:43 then,

23:43 uh,

23:44 closely related to the operational risk is also,

23:46 um,

23:47 the heightened IT and cybersecurity risk,

23:48 and this,

23:49 um,

23:50 a large reason for a portion,

23:51 a large,

23:52 uh,

23:52 reason for this,

23:53 uh,

23:53 is because individuals are working from home,

23:56 because staff are working from home.

23:58 They might not have the necessary.

24:00 Uh,

24:00 IT security on the devices and,

24:02 uh,

24:02 authentication,

24:04 uh,

24:04 for accessing systems,

24:06 uh,

24:06 and also they might not necessarily be fully

24:08 familiar with working remotely,

24:10 um,

24:11 so they might be,

24:12 uh,

24:12 opening up an attack.

24:13 The attack surface for

24:14 cyberattacks could actually be increasing.

24:17 Um,

24:17 and this applies also to individuals who are using the services,

24:20 the customers,

24:21 customers of the institutions.

24:22 Uh,

24:23 there are numerous cases of,

24:24 uh,

24:24 phishing attacks coming on,

24:26 um,

24:27 uh,

24:27 kind of taking advantage of people,

24:28 um,

24:29 who are unfamiliar with the digital payments now,

24:31 moving on to digital payments,

24:32 and also because.

24:34 Um,

24:34 at this point there are quite a few,

24:36 um,

24:37 uh,

24:37 social,

24:37 um,

24:38 uh,

24:38 kind of donations,

24:39 etc.

24:40 solicitation for donations which are coming up.

24:42 Some of them are,

24:42 of course,

24:43 genuine,

24:44 and some of them are,

24:44 are plainly phishing attempts.

24:46 So a lot of,

24:47 um,

24:47 customers are,

24:48 are falling prey,

24:49 uh,

24:49 to such attacks,

24:51 uh,

24:51 and then the last point,

24:53 uh,

24:53 last transmission channel of the risk is,

24:55 is more on the,

24:55 on the credit and liquidity risk,

24:57 uh,

24:57 predominantly starting as a liquidity risk.

25:00 Uh,

25:00 and these are,

25:01 uh,

25:01 related to,

25:02 uh,

25:02 participants in the payment system.

25:04 Uh,

25:04 let's say a commercial bank

25:06 is unable to,

25:07 um,

25:07 uh,

25:08 uh,

25:08 kind of,

25:08 uh,

25:09 uh,

25:09 apply liquidity for the functioning of the payment system because

25:12 their money perhaps is locked up in,

25:14 in another market,

25:15 and,

25:15 um.

25:16 Market,

25:16 uh,

25:16 there's a lot of volatility and because obviously they don't have enough money to,

25:20 uh,

25:20 to place as collateral for the intraday liquidity in the payment system,

25:23 um,

25:24 so there could be liquidity risks which,

25:25 which might come up

25:26 and that liquidity risk could transmit,

25:28 uh,

25:28 and translate into a credit risk,

25:30 um,

25:30 if left,

25:31 uh,

25:31 unmitigated,

25:32 um,

25:33 uh,

25:33 and at this point there's been a lot of responses from the central banks,

25:36 um,

25:37 to ensure liquidity,

25:38 adequate liquidity to the banking system.

25:40 Uh,

25:40 and at this point we have not seen any case of,

25:42 um,

25:43 uh,

25:43 uh,

25:43 kind of a failure in a payment system because of

25:45 a participant having,

25:46 uh,

25:47 not having liquidity,

25:48 but this is an area which needs to be

25:50 very closely watched,

25:51 uh,

25:52 in particular,

25:52 uh,

25:53 on fast payment systems where,

25:54 uh,

25:55 liquidity needs much higher,

25:57 uh,

25:57 in particular during extended periods of,

25:59 um.

26:01 Are doing extended periods of um

26:02 uh operation um where the liquidity uh uh infrastructure is not available,

26:07 for example,

26:07 a weekend

26:09 or perhaps during week break which will come up,

26:10 come on,

26:10 coming,

26:10 uh,

26:11 in a few weeks,

26:12 um,

26:12 there could be extended periods of holidays

26:13 the banking system might not be working,

26:15 uh,

26:15 plus any,

26:16 any,

26:17 uh,

26:17 risks might actually become much bigger,

26:19 you know,

26:19 in such periods,

26:20 uh,

26:21 so I think,

26:21 um,

26:22 and also we could be increasing participation of non-banks in the payment systems.

26:26 They might not necessarily have access to,

26:28 uh,

26:28 to liquidity,

26:29 and that that is also an area which needs to be,

26:31 uh,

26:31 looked at,

26:31 uh,

26:32 moving on to

26:33 the policy responses,

26:35 um,

26:35 and I'm,

26:35 and I'm grouping them,

26:36 uh,

26:37 into a few categories,

26:38 and one of the categories is about

26:40 supporting people

26:41 who are not banked,

26:43 uh,

26:43 to get access to,

26:45 uh,

26:45 to,

26:45 to open accounts

26:46 and,

26:47 and also people who are typically not activated some service like,

26:50 um,

26:50 like you have a bank account,

26:51 but you use the debit card,

26:53 but you've never used internet banking,

26:55 uh.

26:55 There is a,

26:55 there is a process to,

26:56 to kind of follow for

26:58 setting up,

26:58 um,

26:59 access to your internet banking,

27:00 and I'm including all of that under the general

27:02 bucket of simplified

27:04 customer due diligence and,

27:05 um,

27:06 and electronic KYC.

27:07 So many,

27:08 uh,

27:08 countries we are seeing are,

27:10 um,

27:10 are simplifying the requirements for opening an account,

27:12 and this also broadly applies,

27:14 uh,

27:15 to kind of active.

27:16 of certain services,

27:17 um,

27:17 and,

27:18 um,

27:18 this started,

27:19 uh,

27:19 we are seeing a big,

27:20 big,

27:20 uh,

27:21 driver for this is,

27:22 uh,

27:22 is primarily for

27:24 allowing new individuals,

27:25 new recipients of government benefit transfers,

27:28 uh,

27:28 to be able to receive it digitally,

27:29 and I will,

27:30 I will talk,

27:30 uh,

27:30 a little bit in more detail,

27:33 uh,

27:33 a little later in my presentation.

27:35 A few examples are,

27:36 uh,

27:37 countries in East Africa and West Africa

27:38 where the mobile money penetration is significant,

27:41 mobile phone penetration is,

27:42 is good.

27:43 Uh,

27:43 they're,

27:44 uh,

27:44 they're allowing,

27:44 uh,

27:45 new mobile limited purpose accounts,

27:47 basic accounts to be opened

27:49 using the mobile phone registration details,

27:52 and,

27:52 uh,

27:52 and these are,

27:53 of course,

27:53 um,

27:54 these have to be combined

27:56 with,

27:56 uh,

27:56 with adequate risk management measures,

27:58 uh,

27:59 primarily with respect to lower limits on the account,

28:01 uh,

28:01 limited,

28:02 uh,

28:02 transaction amounts,

28:03 and perhaps,

28:04 uh,

28:04 at some point to regularize them,

28:06 uh,

28:06 and then make them standard accounts,

28:08 you know.

28:09 Um,

28:09 and we are also seeing,

28:10 um,

28:11 uh,

28:11 kind of government to person programs in Brazil,

28:13 Jordan,

28:13 and,

28:13 I'm just giving a few examples where

28:16 they're conducting remote enrollment of beneficiaries to open,

28:18 uh,

28:18 electronic wallets,

28:19 and the,

28:20 and the information to open the account is coming

28:22 in from the social registries of the government.

28:24 So the individual is already known to the government,

28:27 and it is treated as,

28:28 uh,

28:28 adequate,

28:28 uh,

28:29 basis for opening an account for an individual

28:31 and,

28:31 uh,

28:31 and seen as adequate to meet the,

28:34 the customer due diligence requirement.

28:35 And here I would draw your attention to a press release,

28:38 uh,

28:38 press statement by the FAA,

28:39 um,

28:40 uh,

28:40 the Financial Action Task Force,

28:42 which basically talked about,

28:43 um,

28:44 the full availability under the risk-based,

28:46 um,

28:47 KYC approach,

28:48 uh,

28:48 for such approaches,

28:49 and,

28:49 and they advocated for fully,

28:51 uh,

28:51 taking advantage

28:52 of all the flexibility available,

28:54 uh,

28:54 as long as there's an adequate analysis of the,

28:57 of the risks,

28:58 uh,

28:58 and the second area.

29:00 Is,

29:00 um,

29:01 uh,

29:01 is,

29:01 is also relaxation of authentication requirements,

29:04 and this is primarily being seen in,

29:05 in Europe in countries where there's quite a,

29:07 quite a good penetration of contactless payments,

29:10 uh,

29:10 whereas,

29:11 as,

29:11 uh,

29:11 as all of you know,

29:12 typically

29:13 contactless payments come with,

29:14 uh,

29:14 without PI for,

29:15 uh,

29:16 transactions typically below $50 or $25 in some jurisdictions.

29:20 Um,

29:21 and,

29:21 um,

29:21 uh,

29:22 and,

29:22 uh,

29:22 and for transactions above that you're required to enter the PIN,

29:25 and again the same logic that,

29:27 uh,

29:27 people are afraid to,

29:28 uh,

29:29 touch surfaces which they're not familiar with

29:31 or where they're not,

29:31 they're not sure about whether it is clean and so on,

29:34 uh,

29:34 so there are,

29:35 uh.

29:36 Countries which are changing the limits

29:38 for conducting contactless card and contactless mobile payment transactions

29:43 without having to enter the PIN,

29:44 and they increased the amount and I think they increased it to €75 if I'm not wrong

29:49 in almost all the European countries.

29:51 Um,

29:51 and then similarly,

29:52 uh,

29:52 we're also seeing,

29:54 uh,

29:54 some countries,

29:55 um,

29:55 where they're saying that cash just continues to be a legal tender,

29:58 continues to be accepted as a means of payment,

30:01 and they are putting out,

30:01 uh,

30:02 recommendations that

30:03 all retailers are required to accept,

30:05 um,

30:05 continue to accept cash as a means of payment.

30:08 Um,

30:08 there are also,

30:09 uh,

30:09 some,

30:10 uh,

30:10 uh,

30:11 some central banks have,

30:12 uh,

30:12 issued instructions that

30:14 banks have to maintain adequate cash in their ATMs.

30:16 They're opening up

30:17 dedicated,

30:18 um,

30:18 and,

30:18 um,

30:19 and pooling in the cash distribution networks

30:21 of the entire banking system to ensure that cash is made available,

30:24 and ATMs in some cases also

30:26 to ensure that,

30:27 uh,

30:27 uh,

30:28 supply of fresh currency notes into the system,

30:30 uh,

30:31 through using ATML as as a channel.

30:33 Uh,

30:33 in related to all this,

30:35 um,

30:35 uh,

30:36 uh,

30:36 with respect to,

30:37 uh,

30:37 new

30:38 means of payments being introduced,

30:39 uh,

30:40 we kind of access to,

30:40 um,

30:41 uh,

30:41 the kind of new customers coming onto,

30:43 onto payment systems,

30:44 uh,

30:45 availability of cash,

30:46 uh,

30:46 being a challenge sometimes,

30:48 then,

30:48 uh,

30:49 huge interest of customers to avail new services.

30:52 Um,

30:53 all of the,

30:53 the,

30:53 uh,

30:54 and this in the context that bank branches and others might not be

30:57 physically accessible

30:58 is driving the need for,

31:00 uh,

31:00 introducing

31:01 other channels for customer support.

31:03 Um,

31:03 almost all the banks nowadays

31:05 have,

31:06 um,

31:06 a contact center,

31:07 call center,

31:08 but they might not be fully staffed.

31:10 They might not be functioning

31:11 24/7.

31:12 Um,

31:13 so many countries are putting.

31:14 Requirements that

31:15 uh these call centers have to be open longer,

31:17 uh,

31:17 have to be staffed better,

31:19 and this also introduces the operational risk I was mentioning earlier,

31:23 because very often this might have been outsourced,

31:25 um,

31:26 and these people have to now perhaps work from their homes

31:28 might with the unreliable telecom,

31:30 um,

31:31 uh,

31:31 network and quality.

31:32 So it also is a dimension of the operational risk I was mentioning earlier.

31:36 Uh,

31:36 and there's some central banks have started using,

31:39 um,

31:39 chatbots,

31:40 um,

31:40 uh,

31:41 specifically deployed during COVID

31:43 to help in,

31:44 uh,

31:44 automating,

31:44 uh,

31:45 many of the customer service queries,

31:47 uh,

31:47 and we're also seeing,

31:48 uh,

31:48 some of the mobile money providers and some banks,

31:50 uh,

31:50 using

31:51 social media channels like WhatsApp,

31:53 uh,

31:53 and other channels to,

31:55 uh,

31:55 to interact with their customers,

31:57 uh,

31:57 including,

31:58 including open accounts,

31:58 and in some cases we have seen

32:00 also to open merchant,

32:01 uh,

32:01 uh,

32:02 uh,

32:02 accounts.

32:04 Um,

32:04 the second,

32:05 um,

32:05 the,

32:05 a broad area we are seeing is

32:07 promoting and ensuring availability of digital payments,

32:10 and here at one level it is simply about promoting the adoption,

32:13 and I think a very good example of us,

32:15 this is the monitor part of Singapore.

32:17 They came out with very,

32:18 very strong,

32:19 um,

32:19 uh,

32:20 kind of awareness campaigns for the adoption of digital payments,

32:22 in particularly the Pay Now,

32:24 I think,

32:24 uh,

32:24 service,

32:24 um,

32:25 which is a fast payment service there,

32:27 uh,

32:27 in coordination with the banking sector.

32:29 Uh,

32:29 there are also other countries like,

32:31 um,

32:31 Albania,

32:32 Bangladesh,

32:32 Argentina,

32:33 and there's a few others who basically they in some sense use moral suasion,

32:37 uh,

32:38 encouraged to request,

32:39 um,

32:39 the,

32:40 uh,

32:40 providers to eliminate,

32:41 uh,

32:41 fees on digital payments,

32:43 um,

32:43 and,

32:44 and in other such services,

32:46 um,

32:46 to basically to enable,

32:48 uh,

32:48 customers to

32:49 move,

32:50 uh,

32:50 in a big way to digital payments.

32:52 And

32:52 then,

32:53 many countries in,

32:54 um,

32:54 Africa.

32:55 Uh,

32:55 have raised transaction limits on mobile money operations,

32:58 and this is basically as typically as a risk management measure.

33:02 Uh,

33:02 mobile money accounts come with certain limits,

33:04 uh,

33:04 both daily limits,

33:05 um,

33:06 uh,

33:06 as well as monthly limits in some cases,

33:08 both volume and value,

33:10 uh,

33:10 and also some limits on how much money you can keep in the account.

33:13 The other example is,

33:14 um,

33:15 uh,

33:15 the Central Bank of Lithuania

33:17 provided emergency liquidity support to payment service providers,

33:20 and this here is particularly,

33:21 I'm referring to non-bank payment service providers,

33:23 uh,

33:23 and not,

33:24 not the,

33:24 not the banks,

33:25 uh,

33:25 who of course had liquidity support.

33:28 Um,

33:28 uh,

33:29 carrying on continuing on the promoting digital payments,

33:31 um,

33:32 there are also significant initiatives we're seeing,

33:34 uh,

33:34 uh,

33:34 you kind of providing incentives for adoption,

33:37 um,

33:37 uh,

33:37 and a good example of that is Palestine where,

33:39 um,

33:40 uh,

33:41 many banks have actually

33:42 started providing incentives to customers to use digital payments.

33:46 Um,

33:46 and there are cases where QR codes are being very widely deployed now,

33:50 um,

33:50 uh,

33:50 for,

33:51 for making it easier for merchants to

33:53 get access to,

33:54 um,

33:54 uh,

33:54 to access digital payments,

33:56 and,

33:56 um,

33:57 very simple merchant platforms are being rolled out.

33:59 Um,

34:00 including in some cases like Spain and also Jordan,

34:02 that e-commerce platforms are being created to help shoppers,

34:05 to,

34:05 uh,

34:06 retailers to,

34:07 to,

34:07 to kind of manage their purchases which typically they were doing physically,

34:11 but now they're moving,

34:12 uh,

34:12 helping the banks are helping,

34:14 uh,

34:14 these merchants move to move to e-commerce.

34:16 Uh,

34:16 in many cases these are

34:17 first-time e-commerce merchants,

34:20 um,

34:20 and there are also cases where,

34:21 um,

34:22 uh,

34:22 ATMs typically,

34:23 um,

34:24 many countries are simply allow only allow cash withdrawal.

34:27 Um,

34:27 of course there are ATMs which accept cash.

34:30 Uh,

34:30 many of the ATMs in general are,

34:32 are designed to also accept cash,

34:33 but typically it's not turned on.

34:35 Um,

34:35 and many banks are now,

34:37 uh,

34:37 in many countries are requiring ATMs to also start accepting cash,

34:40 and a good example of that is,

34:41 uh,

34:41 is Kent.

34:44 Uh,

34:44 and a,

34:44 and a related point,

34:45 uh,

34:45 I mentioned earlier about the challenges with respect to cash,

34:49 there's also another dimension which is being,

34:50 uh,

34:50 which is,

34:51 which is being seen

34:52 in some countries,

34:53 um,

34:53 a check settlement,

34:54 uh,

34:55 or check as a payment instrument,

34:56 uh,

34:56 is being impacted because the check clearinghouse

34:59 functionality in many countries still involves a manual process.

35:02 So even if you're using check truncation,

35:04 it still requires the individual,

35:06 uh,

35:06 who's presenting the check to still appear in person.

35:09 Um,

35:10 many countries still don't have the remote capture,

35:12 as they call it,

35:12 uh,

35:13 allowing a person to

35:14 capture the check-inage on the mobile phone and transmit it.

35:17 Uh,

35:17 many countries don't have that,

35:18 so,

35:19 um,

35:19 many countries don't have check truncation.

35:21 So even if countries have check truncation because

35:23 the physical exchange of checks is required,

35:25 um,

35:25 uh,

35:25 many,

35:26 many central banks have,

35:27 uh,

35:27 suspended the operations of,

35:29 uh,

35:29 of.

35:30 Check,

35:30 um,

35:30 um,

35:31 kind of,

35:31 uh,

35:31 check clearing houses.

35:32 This,

35:32 of course,

35:33 has implications for,

35:35 uh,

35:35 customers who had,

35:36 um,

35:37 uh,

35:37 kind of,

35:37 uh,

35:38 uh,

35:38 banks which had,

35:39 uh,

35:39 banks and other,

35:40 other lenders

35:41 who might have collected checks as a postdated checks for,

35:44 uh,

35:44 for kind of as a standard instruction,

35:46 no,

35:46 for,

35:46 uh,

35:47 payment of mortgages and payment of other loans.

35:49 They might get impacted.

35:51 Um,

35:51 uh,

35:52 there,

35:52 there could also be implications for,

35:54 uh,

35:54 uh,

35:55 commercial,

35:55 um,

35:56 uh,

35:56 kind of commercial traders who might have collected,

35:58 uh,

35:59 checks as,

35:59 um,

36:00 uh,

36:00 postdated checks as a mechanism to,

36:02 uh,

36:03 to kind of,

36:03 uh,

36:04 uh,

36:04 in,

36:04 in some sense it's a collateralized lending.

36:06 The check is acting as a collateral in some sense,

36:08 and the check,

36:09 uh,

36:09 is to be presented at a later point in time,

36:11 and they are perhaps unable to present it now.

36:13 So this could also lead to,

36:15 uh,

36:15 lead to liquidity risk.

36:16 And because of

36:17 this,

36:17 uh,

36:17 this issue.

36:18 Uh,

36:19 there is also an increased pressure on banks to promote digital channels,

36:22 uh,

36:22 and in some ways they're also helping customers

36:25 to convert the check into some kind of a debit,

36:27 um,

36:27 a direct debit instruction,

36:29 uh,

36:29 based on certain procedures where,

36:31 uh,

36:32 the check information is,

36:33 uh,

36:33 transmitted to them.

36:34 Uh,

36:35 some details are transmitted that is kept on the file,

36:37 and then they try to convert it into,

36:38 um,

36:39 direct debit instruction

36:40 using the check as a,

36:41 as a mandate.

36:42 Uh,

36:42 these are some of the examples we,

36:44 we assume.

36:45 Uh,

36:45 and also,

36:45 uh,

36:46 bank branches,

36:47 while not necessarily closed,

36:48 uh,

36:49 uh,

36:49 in many cases are being asked to restrict the operating hours,

36:52 uh,

36:52 because of the challenges the staff might face in,

36:55 um,

36:55 uh,

36:56 in,

36:56 in accessing the branches,

36:57 and then also because some of the payment systems operating hours are also being,

37:01 um,

37:02 are being shortened,

37:03 uh,

37:03 to kind of avoid,

37:04 um,

37:05 uh,

37:05 liquidity risk which is coming in when the system is open for a long time.

37:08 And the banks are unable to participate,

37:10 uh,

37:10 then you might create a liquidity risk in the system because

37:13 some other participants who are continuing to function might expect payments,

37:16 uh,

37:17 or they might make,

37:18 make an instruction,

37:19 but that might not be a fully processed because the,

37:21 uh,

37:21 because the counterparty is not available to,

37:23 to act on it,

37:25 um,

37:25 so because of all these reasons we are seeing,

37:27 um,

37:27 the operation hours of the bank is reducing,

37:29 we are seeing

37:30 suspension of the check clearing houses,

37:32 so all of this kind of puts more pressure

37:34 on,

37:34 on,

37:34 on digitization.

37:36 Um,

37:37 then coming on to,

37:38 um,

37:38 some of the policy responses with respect to risk management,

37:41 uh,

37:41 um,

37:42 uh,

37:42 we are seeing significant emphasis on business contriity planning.

37:45 Some countries have invoked business continuity planning procedures for the,

37:48 uh,

37:48 operations of the core payment systems like RTGS and,

37:51 uh,

37:52 depository for government securities,

37:53 and,

37:53 uh,

37:54 including also the capital markets.

37:56 Um,

37:57 uh,

37:57 there's also,

37:58 um,

37:58 been,

37:59 uh,

37:59 cases where,

38:00 um,

38:01 um,

38:01 uh,

38:02 some of the central banks have asked for

38:04 validation of the business continuity plan

38:06 of,

38:06 um,

38:07 of some of the,

38:07 of the,

38:07 some of the continuing institutions.

38:09 Um,

38:10 CCP is having a lot of attention,

38:12 uh,

38:12 at this point because,

38:13 um,

38:13 uh,

38:14 kind of,

38:14 uh,

38:15 as the central counterparties

38:17 kind of concentrate the risk in the,

38:19 in the capital,

38:19 um,

38:20 and money markets.

38:21 Uh,

38:21 and if they go down,

38:22 it has a big systemic implication.

38:24 Uh,

38:24 there have been,

38:25 there's been one instance,

38:26 one recorded instance at this point

38:28 of,

38:29 um,

38:29 uh,

38:29 participant in the Chicago Mercantile Exchange,

38:32 um,

38:32 uh,

38:32 actually defaulting,

38:34 uh,

38:34 unable to meet the settlement obligation

38:36 because of which the CCP had to step in and auction the assets.

38:39 Uh,

38:39 other than that,

38:40 we have not heard of any instances,

38:41 but very clearly

38:43 there is quite a bit of volatility in the margin requirement,

38:46 uh,

38:46 at this point,

38:47 um,

38:48 not just in the,

38:49 um.

38:50 Not just in the um

38:52 um uh not not not specifically in the

38:55 uh the initial margin but certainly on the on the daily margin variation margin

38:59 uh a lot of um many intraday margin calls and so on.

39:03 Uh,

39:03 then,

39:03 um,

39:04 there's quite a bit of,

39:05 uh,

39:05 uh,

39:05 relaxation of the reporting requirements.

39:07 Uh,

39:07 uh,

39:07 a lot of central banks are,

39:09 and banking supervisors are,

39:10 are kind of doing regulatory forbearance on,

39:13 uh,

39:13 on some of the prudential requirements,

39:15 but we're also seeing some,

39:16 uh,

39:16 relaxation on the,

39:17 on the reporting requirements,

39:19 um,

39:19 with respect to the typical

39:21 statutory reporting which is required,

39:23 uh,

39:23 maybe sometimes when they might have been up for renewal,

39:26 the renewals are being extended.

39:28 Um,

39:28 and,

39:28 and things like that,

39:29 uh,

39:30 and then lastly on cybersecurity,

39:31 I,

39:31 I mentioned the heightened risk of cybersecurity.

39:34 There's quite a bit of attention on this topic at this point,

39:37 um,

39:37 and,

39:37 um,

39:38 a few cases,

39:38 um,

39:39 central banks have been,

39:40 uh,

39:40 uh,

39:41 kind of reviewing the,

39:42 uh,

39:42 uh,

39:43 financial institutions cybersecurity plans.

39:45 Uh,

39:45 banks are increasing anti-phishing campaigns,

39:48 um,

39:48 and some banks are,

39:49 uh,

39:49 offering free digital services.

39:52 Digital signature services to their customers,

39:54 uh,

39:54 to help them kind of avoid having to,

39:56 uh,

39:57 exchange sensitive documents over,

39:58 over,

39:59 over email.

40:00 So with this,

40:01 let me quickly move on to one of the

40:03 specific use cases on the government to personal payments,

40:06 and this,

40:06 this context is basically,

40:08 uh,

40:08 typically governments have two

40:10 types of,

40:11 um,

40:11 social protection programs.

40:12 One at one level is the people who are.

40:14 Uh,

40:15 who are not,

40:15 um,

40:16 who are not in the formal sector,

40:18 who fall below a particular,

40:19 uh,

40:19 threshold,

40:20 income threshold,

40:21 they are typically covered under a social protection program,

40:24 uh,

40:24 and these are basically grants given by the government

40:27 to the very vulnerable people.

40:28 Uh,

40:29 and then there are people who are employed,

40:31 um,

40:31 in the formal sector,

40:32 and if they lose their job or,

40:34 uh,

40:34 they have some,

40:35 uh,

40:35 some other,

40:35 uh,

40:35 some other,

40:36 um,

40:36 accident and so on,

40:38 they get covered under a social insurance program.

40:40 Typically,

40:41 the premium is contributed by the employer.

40:43 Uh,

40:43 so what we have seen here is the formal sector workers,

40:47 uh,

40:47 if they're losing their jobs and they're going

40:48 to claim money for the social insurance,

40:51 the people who are,

40:52 um,

40:52 vulnerable,

40:53 who are receiving the social benefit transfers,

40:55 their needs are increasing because of,

40:57 uh,

40:57 whatever little income they might have got from some other business

40:59 that is being impacted,

41:00 so they need to be given more.

41:02 Uh,

41:02 and then there are people who are not,

41:04 they were neither poor

41:05 nor formally employed,

41:06 and so they're not under the social protection net.

41:09 Neither are they in the net of social insurance,

41:11 so they are sometimes,

41:12 some,

41:12 in some sense

41:13 they might fall between,

41:14 uh,

41:15 fall in the crack,

41:16 and there are programs the governments are designing

41:18 to include them,

41:19 either make them,

41:20 um,

41:21 a participant in the social insurance program or make them,

41:24 uh,

41:24 participant in the social benefit transfer program.

41:26 So for this segment which is coming in new,

41:29 there's then a need.

41:30 To create an account for them,

41:32 being able to,

41:32 uh,

41:33 quickly enroll them,

41:34 being able to transfer money to that

41:35 and doing it in a way

41:37 that is,

41:37 um,

41:38 that recognizes the

41:39 social distancing issues,

41:40 right?

41:41 And I'm going to showing you two,

41:42 mockups

41:43 of,

41:44 um,

41:45 of,

41:45 uh,

41:45 cases where the cash is being physically distributed or they're being enrolled,

41:49 uh,

41:49 into the program,

41:50 and you can see the logistical challenges they have to go through,

41:52 uh,

41:53 if you're fully conform with the,

41:54 uh,

41:54 the social protection,

41:56 and the social distancing,

41:57 uh,

41:57 kind of norms.

41:58 Um,

41:58 so very clearly there's a need for very timely action

42:02 both in terms of identifying who needs to be paying

42:04 and also,

42:05 uh,

42:06 when,

42:06 um,

42:07 uh,

42:07 kind of how,

42:08 how quickly you open the account for them.

42:10 It has to scale because many people are coming in.

42:13 It has to scale in terms of rapidly changing the design of the program,

42:16 and then it has to be accessible to the people

42:18 because just by giving money to them is not enough.

42:21 They should be able to access it and make their day to day,

42:23 uh,

42:23 payments to be able to take full advantage of the benefit transfers is coming.

42:28 Um,

42:28 then,

42:28 um,

42:29 on,

42:29 on the remittances market,

42:31 uh,

42:31 remittances are a lifeline,

42:32 uh,

42:33 to,

42:33 uh,

42:33 to many countries,

42:34 and this graph I'm showing on the x axis

42:36 remittances included as a share of GDP,

42:39 and on the y axis is the cost of remittances,

42:41 uh,

42:41 measured as a cost of sending $200.

42:44 Uh,

42:44 and you can see on the right-hand side,

42:45 uh,

42:45 there are at least 10 countries

42:47 where the GDP as a,

42:48 uh,

42:48 remittance as a person of the GDP is greater than 15%.

42:51 And if we take 10% as a,

42:53 as a benchmark,

42:54 then we have at least about 20,

42:55 uh,

42:56 about,

42:56 uh,

42:56 30,

42:56 40 countries.

42:57 And if you take it about 7.55%,

42:59 we get about 60 countries

43:01 where,

43:01 um,

43:02 remittances are a significant component of their,

43:04 of their,

43:05 um,

43:05 of the GDP.

43:06 And,

43:06 and,

43:06 and also in this context,

43:08 uh,

43:08 based on a recent projection by my colleagues in the macroeconomics department.

43:12 The foreign direct investment is likely to fall.

43:14 Uh,

43:14 the official development assistance that is likely to remain flat,

43:18 uh,

43:18 and remittances has become even more important,

43:21 uh,

43:21 in,

43:21 in,

43:21 in many,

43:22 in all,

43:22 in,

43:22 uh,

43:23 in all country contexts in the developing world,

43:25 at least,

43:25 and certainly the countries where it was already a big component of their

43:28 balance of payments and their GDP,

43:30 it's going to become even more critical.

43:32 Uh,

43:32 and some of the implications of the remittances market are very similar

43:35 to what I discussed,

43:36 but there's just one point,

43:37 uh,

43:38 which,

43:38 uh,

43:38 which is important to highlight here,

43:40 which is the issue of Forex vol volatility

43:42 because of the volatility in the foreign exchange markets.

43:45 Uh,

43:45 it is becoming difficult to price the,

43:47 um,

43:47 uh,

43:47 remittances,

43:48 uh,

43:48 services,

43:49 uh,

43:50 and we,

43:50 we,

43:50 we were apprehensive that this might actually

43:52 lead to higher remittance prices,

43:54 but at this point it looks like it is being absorbed.

43:56 But it has to be,

43:57 it's important to see how,

43:58 how this holds up,

43:59 um,

44:00 uh,

44:00 in the coming,

44:01 uh,

44:01 coming weeks and months.

44:03 Uh,

44:03 we,

44:03 we launched a pulse survey,

44:05 uh,

44:05 which is done every week.

44:06 Um,

44:07 it includes a survey of,

44:08 um,

44:09 the private sector,

44:10 the,

44:10 uh,

44:10 survey of regulators,

44:11 and many of you in the region have

44:13 kindly participated in that.

44:14 And we're also doing a pulse survey,

44:16 uh,

44:16 all with respect to monitoring the cost of remittances,

44:19 and that is basically showing it's a very complex chart,

44:21 and I will,

44:22 uh,

44:22 leave it to you to

44:23 look at it at leisure.

44:24 But basically what this is conveying is that in general

44:27 we are seeing,

44:27 uh,

44:28 actually a fall in the price of remittances,

44:30 but it could be misleading

44:31 because the number of providers in the market,

44:33 number of services available for remittances are.

44:35 Actually declining,

44:36 so many providers are,

44:38 are still functioning,

44:38 but,

44:39 uh,

44:39 but at a reduced capacity.

44:41 But the services they're providing,

44:42 they're not able to provide the full range of services because of the,

44:45 uh,

44:46 various impacts,

44:46 um,

44:47 they're having to the systems,

44:48 the staff,

44:49 and to their operations.

44:50 So as a result,

44:50 the services which are available are primarily digital,

44:53 and digital services are in general cheaper

44:56 and,

44:56 uh,

44:56 than cash-based services.

44:57 So because of that,

44:58 we're seeing

44:58 a drop in remittances based on the sampling you're doing,

45:01 but it's,

45:01 uh,

45:02 it's not very,

45:03 it's not very clear.

45:04 Whether they can fully rely on that

45:06 and then also,

45:06 um,

45:07 uh,

45:08 many,

45:08 many,

45:09 many recipients,

45:09 many remittance providers,

45:11 uh,

45:11 remittance senders

45:12 might not necessarily have access to digital mechanisms.

45:15 And even if they have,

45:16 their family members might not be able to access it.

45:18 So,

45:19 uh,

45:19 so maybe the loop is not closed.

45:21 So because of it,

45:22 there's,

45:22 uh,

45:23 people who have the money to send,

45:24 they might not be able to send at this point,

45:26 uh,

45:26 and of course the medium term effect could be that they might

45:28 actually lose their jobs and they might have to return back.

45:31 So this is an area which has to be very,

45:32 uh,

45:32 closely watched.

45:35 So based on this we um

45:36 we issued a call to action um for the remittances market and um and just basically

45:41 talked about that in the short term in the immediate and short term.

45:44 Uh,

45:44 we need to actively

45:46 promote and enable adoption of digital means.

45:48 We need to keep remittance services,

45:50 essential services,

45:51 uh,

45:51 and we need to,

45:52 uh,

45:52 support the remittance service providers to manage the financial risk,

45:55 uh,

45:55 perhaps providing them some,

45:56 uh,

45:57 support on the foreign exchange,

45:58 uh,

45:58 uh,

45:59 markets,

45:59 providing some liquidity support,

46:01 um,

46:01 and enabling them to access the,

46:03 the banking channels in a much more efficient way.

46:05 And in the medium term,

46:07 uh,

46:07 we believe that the focus has to be on enabling new models for remittances

46:11 which are coming into the market,

46:12 uh,

46:13 including interlinking of fast payments.

46:15 Um,

46:16 for example,

46:16 in the Middle East,

46:17 many of the countries are deploying fast payments

46:19 in the,

46:19 in the region in Southeast Asia,

46:21 many countries are.

46:21 Either have it or are introducing it

46:24 and one can imagine

46:25 um um uh kind of a scenario where some of the fast payment systems are interlinked

46:29 uh making it um instantaneous to be uh to send the money

46:32 uh and also since it uses some of the existing payment infrastructure

46:36 the cost structure might be significantly lower,

46:38 um,

46:39 and they could we,

46:40 we,

46:40 we also believe that there has to be

46:42 increased focus on the universal financial access,

46:44 uh,

46:44 to ensure that both the senders and the recipients

46:46 are able to,

46:47 uh,

46:47 use digital channels,

46:49 uh,

46:49 and then,

46:50 um,

46:50 lastly.

46:51 Um,

46:52 access to the domestic infrastructure,

46:53 um,

46:54 uh,

46:54 for the remittance service providers,

46:56 uh,

46:56 for example,

46:56 many countries now Western Union is asking for access

46:59 to the,

47:00 uh,

47:00 fast payment system in the country so that they can plug in.

47:02 So on the origination side,

47:03 it might be Western Union,

47:05 uh,

47:05 which originates the transaction,

47:06 but they terminate at.

47:07 The fast payment system in the country

47:09 and then from there it is then distributed

47:11 and this means that access policies might have to

47:13 be relooked at

47:14 maybe API based accesses

47:16 or maybe enabling uh existing participants in the fast payment systems to

47:20 also enroll remittance companies as their customers.

47:24 Um,

47:24 there are also new models of

47:26 platform-based services which basically aggregate both

47:29 outgoing and ingoing incoming transactions or

47:31 aggregate transactions for the whole region.

47:33 Uh,

47:33 in some sense of a regional integration platform

47:35 which could also be leveraged for remittances

47:38 and in the REAN region,

47:39 given their long-standing discussions on RCN pay,

47:42 I think this is an area which needs to be,

47:44 uh,

47:44 closely looked at.

47:45 And then lastly,

47:46 uh,

47:46 and that's why I put it at the center

47:48 is a strong focus on AML and KYC.

47:50 Nothing

47:51 we do,

47:51 uh,

47:52 should compromise,

47:52 uh,

47:53 on that.

47:54 Uh,

47:54 in the interest of time,

47:55 I could perhaps,

47:56 um,

47:56 stop here,

47:57 uh,

47:57 by just showing that,

47:59 um.

48:00 Um,

48:01 we believe that this is the time now for,

48:03 uh,

48:03 um,

48:03 for all the regulators and the international community

48:06 to really double down on increasing access and usage of digital payments.

48:10 There's got quite a bit of momentum.

48:12 Um,

48:12 many central banks are doing reforms which have been long pending,

48:15 uh,

48:16 including in the,

48:17 in the,

48:17 in the Middle East region where,

48:18 um,

48:19 Hakima comes from,

48:20 and she can attest to the fact that,

48:21 um.

48:22 And she can attest to the fact that uh

48:24 reforms which are pending for like several years,

48:26 uh,

48:26 have been done in a matter of weeks at this point.

48:28 So we need to really see the momentum

48:30 and I'm showing you,

48:31 um,

48:31 uh,

48:32 a graphic from,

48:32 um,

48:33 a publication called The Payment aspects of Financial Inclusion,

48:36 uh,

48:36 the famous Poffy House which kind of talks about the

48:38 Critical enablers

48:40 and uh catalytic pillars.

48:42 There was a recent update to that report,

48:43 um,

48:44 which,

48:44 which talks about a,

48:46 a passing deal,

48:46 um,

48:47 which brings in,

48:48 uh,

48:48 take into account all the new developments,

48:50 and I think

48:51 combining these two,

48:52 is something which provides a good framework for us.

48:55 Uh,

48:55 some of the critical enablers we have identified in the,

48:57 in the,

48:57 the course of this crisis

48:59 include,

48:59 uh,

49:00 the remote onboarding,

49:00 simplified,

49:01 uh,

49:02 CDD,

49:03 uh,

49:03 simplification of the payment and acceptance platforms,

49:05 coordination,

49:06 incentives,

49:07 and then also the,

49:08 uh,

49:08 consumer protection and education.

49:11 Uh,

49:12 and the importance of fast payments is

49:13 also something which has been highlighted very,

49:15 uh,

49:15 very significantly in this crisis,

49:17 and I think we need to really accelerate

49:19 the rollout of fast payments across the world.

49:20 And,

49:21 uh,

49:21 and some of you could see,

49:22 uh,

49:23 some of the examples,

49:23 um,

49:24 uh,

49:24 from the region Pay now and the prompt pay on the,

49:26 on the right.

49:28 Um,

49:28 then,

49:29 um,

49:29 this crisis has also highlighted the,

49:31 um,

49:31 the demand,

49:32 uh,

49:32 for,

49:33 uh,

49:33 unified,

49:34 um,

49:34 uh,

49:34 government to person architecture,

49:36 uh,

49:36 kind of giving the functionality to be able to,

49:39 at the press of a button,

49:40 uh,

49:40 being able to reach,

49:41 um,

49:42 you know,

49:42 the businesses and individuals who are impacted by the crisis.

49:45 Uh,

49:45 the US government,

49:46 uh,

49:47 kind of announced a 350

49:48 $350

49:50 billion of relief,

49:51 uh,

49:51 but to get,

49:52 get money across to,

49:53 uh,

49:53 across to the individuals,

49:54 uh,

49:54 they had to really struggle.

49:56 Um,

49:56 and I'm sure many,

49:57 many countries,

49:58 um,

49:58 uh,

49:59 kind of face the same problem,

50:00 but countries which had invested

50:02 in,

50:02 in automating many of the steps,

50:04 um,

50:05 were able to do it in,

50:05 in a matter of minutes,

50:06 uh,

50:06 to at least get the money to,

50:08 into the individual's accounts.

50:09 And here we are,

50:10 we need to look at

50:11 the complexity of the,

50:12 of the government of person side.

50:14 There are many ministries involved,

50:16 many kinds of payments.

50:17 One for teachers,

50:17 one for,

50:18 uh,

50:19 students,

50:19 one for,

50:20 uh,

50:20 old age,

50:20 um,

50:21 people,

50:21 one for people who are,

50:22 who are impacted because of some,

50:24 uh,

50:24 big event in the country,

50:26 uh,

50:26 and so on.

50:27 And there are different channels which are used,

50:28 uh,

50:29 for each one,

50:29 there's a separate program,

50:30 separate identity.

50:32 So I think we need to unify all of them

50:34 in a way that an individual can choose where they want to receive their money.

50:37 Uh,

50:38 and there's a common payment system which is,

50:39 uh,

50:39 which is used

50:40 in all the existing channels in the country

50:42 in terms of acceptance points are available,

50:44 uh,

50:44 to,

50:44 to the individual

50:45 and being able to,

50:46 uh,

50:47 uh,

50:47 enroll people,

50:48 uh,

50:48 rapidly,

50:49 uh,

50:49 and in a very quick fashion,

50:51 and I think there's a,

50:52 a vision for a unified,

50:53 uh,

50:53 GDP architecture,

50:54 and the World Bank is

50:55 working along with,

50:57 uh,

50:57 CAP and,

50:57 uh,

50:58 various other,

50:59 um,

50:59 departments within the World Bank,

51:00 uh,

51:01 to,

51:01 to kind of,

51:01 um,

51:02 realize this vision.

51:03 And then lastly this is a paper which um was actually published just today

51:08 um uh with the World Bank by a vice president as a

51:11 uh as a lead author and uh I had the uh

51:13 privilege also to be uh of being a co-author on that paper

51:16 and we here we envisage a four-step process,

51:18 uh,

51:19 four-stage process to move to a universal,

51:21 um,

51:22 uh,

51:22 usage of digital financial services

51:24 starting from the basic access to transaction accounts,

51:26 then moving on towards more intensive usage,

51:29 uh,

51:29 and additional district financial services,

51:31 and then widespread adoption.

51:32 And I think at this point,

51:34 very few countries are in stage 4,

51:36 perhaps China,

51:37 uh,

51:37 maybe Kenya,

51:38 uh,

51:39 and I think there's enough,

51:40 uh,

51:40 there's significant room for,

51:42 uh,

51:42 an opportunity

51:43 for,

51:43 uh,

51:44 many countries now in the region,

51:45 um,

51:45 in Southeast Asia

51:47 to perhaps move from stage 2 to stage 3 and stage 3 to stage 4,

51:50 and in some countries in,

51:51 in Southeast Asia,

51:52 perhaps that's still at stage 1.

51:54 So with this,

51:54 let me,

51:55 let me conclude,

51:55 and,

51:56 um,

51:56 I'd be happy to address any questions,

51:58 and I'll,

51:58 uh,

51:58 I'll pass it back to Marco.

52:02 Thank you very much,

52:03 Harish,

52:03 for the presentation.

52:04 Um,

52:05 there is one,

52:06 question which,

52:07 uh,

52:07 quite elaborate,

52:08 so I sent it over to you,

52:10 uh,

52:10 over your email,

52:12 so I will give you the time to,

52:13 uh,

52:14 take a look

52:15 and,

52:15 uh,

52:15 um,

52:16 and respond.

52:18 Um,

52:19 Um,

52:21 just to,

52:21 uh,

52:22 before I give the floor,

52:23 uh,

52:23 to back to Akima to answer the questions that,

52:26 uh,

52:27 came for her,

52:29 uh,

52:29 uh,

52:29 hopefully

52:30 she's still with us.

52:31 Um,

52:32 I just wanted to remind everyone,

52:34 we,

52:34 uh,

52:35 will share the slides,

52:37 uh,

52:37 and,

52:37 uh,

52:38 uh,

52:38 Harish,

52:38 there is a request also to share the report you just mentioned,

52:42 so we can,

52:42 uh,

52:42 we can get

52:44 along with,

52:45 uh,

52:45 uh,

52:46 perhaps other relevant,

52:47 uh.

52:48 Uh,

52:48 links or materials.

52:50 Um,

52:50 so,

52:51 uh,

52:51 Akima,

52:52 uh,

52:52 over to you if you would like to please answer the three,

52:55 questions.

52:57 Yeah,

52:57 um,

52:58 thank you,

52:59 Marco.

53:00 Uh,

53:00 the first question was about the professional,

53:03 uh,

53:03 the patent.

53:04 What is the patent?

53:05 It's a professional tax paid by merchants and,

53:08 uh,

53:08 some.

53:09 A physical person who exerts some liberal activities

53:15 and when they pay this patent they are given

53:20 a patent ID

53:22 to ensure that they are OK with the tax

53:25 department.

53:26 The second question was about

53:29 who is

53:30 conducting financial education in Morocco.

53:33 We have implemented in 2013.

53:38 Uh,

53:38 or Moroccan for Financial Education.

53:41 It's shared by by our governor.

53:44 It's,

53:44 um,

53:44 it's like Oleg

53:47 of Central Bank to conduct uh financial education.

53:52 And

53:53 I think the last question was

53:56 about

53:57 who assessed the merchants,

53:59 who assessed the reputation of merchants.

54:01 This assessment is belonged to acquire,

54:04 could be a bank or a payment institution,

54:07 and

54:08 in central bank,

54:09 we put some criteria

54:11 likeability

54:14 requirements for KIC also,

54:17 but

54:18 the assessment is belong to acquire.

54:21 There was one more question,

54:22 Akima,

54:23 about how you supported the uh retail payment uh systems.

54:27 We support the EMF by implementing

54:30 the necessary measure for the continuity of of business.

54:35 That's,

54:35 that was the principal supports in this crisis in,

54:39 in,

54:39 in the,

54:41 the start of the pandemic crisis.

54:44 We,

54:44 we implement with them the necessary measure

54:49 for the 20

54:49 business of,

54:50 of business.

54:52 Thank you,

54:52 Akima.

54:52 Let me ask the floor back to Haddish and uh if there are any other questions,

54:56 we still a few have a few minutes,

54:58 so please uh send them through the chat so we can.

55:01 Yes,

55:02 um,

55:02 and thank you,

55:03 uh,

55:03 thank you,

55:04 Ricky,

55:04 for your,

55:04 for your question.

55:05 Um,

55:06 I hope you're doing well.

55:07 Uh,

55:07 the question,

55:08 of course,

55:08 is very,

55:08 very valid,

55:10 um,

55:10 and,

55:11 uh,

55:11 things like,

55:12 uh,

55:12 NFC and

55:14 contactless are,

55:15 are not necessarily feasible options in all countries.

55:18 Um,

55:19 uh,

55:19 this is,

55:19 of course,

55:20 just a mix of the policy options available,

55:22 and as I said,

55:23 many of the examples,

55:24 uh,

55:24 there was primarily related to Europe.

55:26 Uh,

55:27 and,

55:27 um,

55:27 uh,

55:28 and you're right,

55:28 uh,

55:28 in saying that,

55:30 uh,

55:30 in particular when you want to expand digital payments very in a rapid manner,

55:33 you need to pay,

55:34 uh,

55:34 pay attention to both the

55:36 sending side

55:37 of,

55:37 uh,

55:37 how do you get money into people's accounts,

55:39 but also you have to take in,

55:40 keep in mind how does the recipient use it,

55:43 uh,

55:44 and that is where I was making the point that,

55:46 uh,

55:46 even if you might,

55:47 uh,

55:47 be a user of digital payments,

55:48 um,

55:49 you might still need cash because of the context in which you live in.

55:52 Uh,

55:52 and even for merchants,

55:53 um,

55:54 uh,

55:54 they might have a problem because their other payments might be in cash,

55:57 um,

55:57 so if they accept in cash and they have to make those two payments,

55:59 they have a problem on cash handling.

56:01 Uh,

56:02 in another way,

56:02 if they are receiving the two payments,

56:03 but the suppliers

56:05 have to be paid in cash,

56:06 then they have a different problem.

56:07 So I think,

56:08 um,

56:08 that is where I think is the biggest challenge,

56:10 and many countries after a lot of,

56:12 um,

56:12 uh,

56:13 have been very fairly quickly been able to

56:15 get the right,

56:16 get it right,

56:17 um,

56:17 get the process of putting money into people's accounts,

56:19 opening new accounts.

56:20 That has been,

56:21 um,

56:22 relatively more successful in doing that.

56:24 But in terms of making available agent locations,

56:27 making available

56:28 merchants where they can be used,

56:29 is a much more difficult battle,

56:31 in particular to do

56:32 in the,

56:33 in the time of a crisis.

56:34 Uh,

56:34 there are a few cases where,

56:36 um,

56:37 uh,

56:37 we have seen where,

56:38 uh,

56:38 bank,

56:39 uh,

56:39 banks have been encouraged to sign up new merchants,

56:41 and this is the case of Morocco where,

56:43 uh,

56:44 she was talking about simplification of the

56:46 CDD.

56:46 Requirements for uh merchants to open accounts

56:49 uh that is clearly an area and also uh faster wider usage of

56:54 QR code-based uh payment mechanism that is very fairly quick to distribute

56:57 um uh and these are some of the mechanisms,

57:00 um,

57:01 of AVRC,

57:02 uh,

57:02 and very clearly this is the,

57:03 the real challenge in,

57:04 in,

57:05 in a crisis to,

57:06 uh,

57:06 to kind of,

57:07 um,

57:07 spur usage of digital payments.

57:09 Uh,

57:10 so Rick,

57:10 I hope I answered your question.

57:11 And in terms of fact of,

57:12 uh,

57:12 your question on FATA should relaxing requirements related to KYC,

57:16 as I mentioned,

57:16 they came out with the first statement,

57:18 um,

57:19 saying that,

57:19 um,

57:20 uh,

57:20 banks,

57:21 um,

57:21 and the,

57:21 the regulators have

57:23 full flexibility,

57:24 uh,

57:24 in interpreting the risk-based assessment,

57:27 uh,

57:27 risk-based approach,

57:28 uh,

57:28 and they encourage them to take advantage of full liberty.

57:31 And recently they also came out with guidelines on

57:33 digital ID and how it can be used for,

57:35 uh,

57:36 for,

57:36 um,

57:37 uh,

57:37 for,

57:37 um,

57:38 the remote account opening,

57:40 uh,

57:40 and remote onboarding

57:41 and as you mentioned,

57:43 the TFKYC is,

57:43 is one of the

57:44 approaches coming instead of coming in from a risk-based approach where you

57:47 really analyze the risk of a particular payment mechanism

57:50 and then you say that for this kind of accounts with a particular.

57:53 Let's say less than $5.

57:55 There the risk is matched by very limited,

57:57 and you could just open an account based on

57:59 just the,

58:00 uh,

58:00 declaration of the ID number,

58:02 um,

58:02 and then capturing some details.

58:04 Uh,

58:05 a tier above that could be where you have to might have to verify it,

58:08 and a tier above that you might ask for additional documents.

58:10 So clearly the tiered KYC combined

58:13 with a digital ID can be very,

58:14 very powerful.

58:15 Thank you.

58:16 Thank

58:16 you,

58:16 Harish.

58:17 OK.

58:18 Um,

58:18 so if there is any other,

58:20 uh,

58:20 last question,

58:21 I will,

58:22 uh,

58:22 give,

58:22 uh,

58:22 uh,

58:23 a minute,

58:23 uh,

58:24 and again,

58:24 thank you,

58:26 uh,

58:26 in the meantime,

58:27 uh,

58:27 uh,

58:27 thank you very much to Harish and,

58:29 uh,

58:30 to,

58:30 um,

58:31 Akima for their,

58:32 for their,

58:32 uh,

58:33 very interesting and uh.

58:35 And relevant presentations.

58:37 Um,

58:38 we

58:40 Of course,

58:40 uh,

58:41 hope that,

58:42 uh,

58:43 uh,

58:44 some of these,

58:45 uh,

58:45 topics will become history,

58:47 but at the same time we know that the crises are always,

58:50 uh.

58:51 Around the corner and we,

58:53 and it's important

58:54 um.

58:55 Um

58:57 Prere for them,

58:58 uh,

58:59 and I think this,

59:00 uh,

59:01 uh,

59:01 will,

59:02 uh,

59:02 uh,

59:03 be an,

59:03 an opportunity,

59:04 uh,

59:05 for,

59:06 uh,

59:06 for,

59:07 uh,

59:07 all of us to learn,

59:08 uh,

59:09 important lessons.

59:10 Um,

59:11 at least,

59:11 we have one more question,

59:13 uh,

59:13 I don't know if you already saw that,

59:16 uh,

59:16 asking,

59:17 uh,

59:17 to provide some example.

59:20 Uh,

59:20 on access to RSPs.

59:25 About RSPs holding accounts.

59:27 And uh

59:29 uh risk measures.

59:31 Uh,

59:32 to be placed,

59:33 the remittance service providers,

59:35 there are,

59:36 of course,

59:36 two categories,

59:37 right?

59:37 So there are,

59:38 uh,

59:39 institutions like,

59:39 uh,

59:40 Western Union,

59:40 MoneyGrams.

59:41 Uh,

59:42 they are in the business of,

59:43 uh,

59:43 they,

59:43 they are typically classified as money transfer operators,

59:46 and they are almost equivalent to a Visa or a Mastercard.

59:49 So they're operating a system.

59:50 They're bringing in participants into the system,

59:53 and the participants,

59:53 in the case of Western Union,

59:54 could be banks,

59:55 could be other

59:56 small exchange houses.

59:58 Um,

59:58 who then act as their channels,

1:00:00 um,

1:00:00 as their members

1:00:02 to distribute,

1:00:02 uh,

1:00:02 to collect,

1:00:03 uh,

1:00:03 originate the remittances

1:00:05 and distribute the remittances,

1:00:06 uh,

1:00:07 so in this case,

1:00:07 um,

1:00:08 for such an institution they don't want to issue accounts to individuals.

1:00:12 What they want is access to payment infrastructure.

1:00:15 Um,

1:00:15 by access to their infrastructure we are referring to access to,

1:00:18 uh,

1:00:19 say,

1:00:19 an RPGS for their,

1:00:20 um,

1:00:21 uh,

1:00:21 for their,

1:00:21 um,

1:00:22 uh,

1:00:22 faster settlement on the foreign exchange side,

1:00:25 uh,

1:00:25 or access to,

1:00:27 uh,

1:00:27 fast payment systems in,

1:00:28 in the originating country and the receiving country,

1:00:30 uh,

1:00:30 to be able to distribute and originate remittance faster.

1:00:34 So I,

1:00:34 I,

1:00:34 I myself,

1:00:35 um.

1:00:36 Um,

1:00:36 uh,

1:00:37 I'm a good user of the remittance services,

1:00:39 uh,

1:00:39 in the United States,

1:00:40 and I,

1:00:41 it always amazes me that I can,

1:00:43 um,

1:00:43 uh,

1:00:43 uh,

1:00:44 in a country like the United States with all

1:00:46 the internet banking and all the digital payment options

1:00:49 if I have to send money using from my account.

1:00:52 Uh,

1:00:52 it'll take 3 days for the clearing process to work,

1:00:54 uh,

1:00:54 and then after that,

1:00:55 of course,

1:00:55 it could be instantaneous,

1:00:57 and because of that I have to use my debit card

1:00:59 to originate the transaction,

1:01:01 uh,

1:01:01 and typically that comes with a higher fee than from a bank account.

1:01:04 Uh,

1:01:04 so if there was a fast payment system in the United States,

1:01:07 um,

1:01:07 uh,

1:01:07 and then it would have been,

1:01:09 um,

1:01:09 on the origination side also it would have been fast,

1:01:11 and the receiving side also,

1:01:12 it would have been fast.

1:01:13 So I think that is the,

1:01:14 uh,

1:01:14 the most important one.

1:01:15 There are some

1:01:16 cases

1:01:17 where the remittance service providers are only originating

1:01:19 the remittance or only distributing the remittance.

1:01:21 And they

1:01:22 might if given the um opportunity

1:01:25 to open new money accounts

1:01:26 they might

1:01:27 uh be able to distribute the remittances into an account

1:01:30 and that's an angle which should be also explored

1:01:32 and I think um

1:01:33 the examples,

1:01:34 um,

1:01:35 I think,

1:01:35 um,

1:01:36 some countries we have,

1:01:37 we are seeing

1:01:38 like,

1:01:38 um,

1:01:38 um,

1:01:39 uh,

1:01:40 kind of,

1:01:40 um,

1:01:40 uh,

1:01:41 microfinance institutions,

1:01:42 uh,

1:01:43 there are also some cases of small banks,

1:01:44 post offices,

1:01:45 they actually start issuing some kind of,

1:01:47 um,

1:01:48 prepaid card or a mobile money account.

1:01:50 I,

1:01:50 I hope I answered the question.

1:01:52 Uh,

1:01:52 I see a question from,

1:01:53 um,

1:01:54 Isaku on what

1:01:56 rural banks,

1:01:56 cooperatives,

1:01:57 and NFI should do.

1:01:58 They may not be on a digital platform and rely on cash heavily

1:02:01 and any suggestions to the regulators,

1:02:03 and this is an area,

1:02:04 I think,

1:02:05 which,

1:02:05 um,

1:02:05 has not really captured the attention.

1:02:07 And thank you,

1:02:08 um,

1:02:08 Isaku,

1:02:08 for bringing this up.

1:02:09 And I can also see why it could be very important in Philippines.

1:02:13 Uh,

1:02:13 the strong,

1:02:14 um,

1:02:14 uh,

1:02:14 kind of the big tiered network,

1:02:16 uh,

1:02:16 tiered hierarchy of banks,

1:02:17 um,

1:02:18 in Philippines,

1:02:18 and I'm assuming also in many,

1:02:20 many other Southeast Asian countries.

1:02:22 So typically a microfinance institution,

1:02:24 rural banks,

1:02:25 they are not direct participants in payment systems,

1:02:28 so they are participating through an intermediate bank,

1:02:30 um,

1:02:31 and so because of that their operational

1:02:32 reliability becomes even more impacted because they're reliant

1:02:35 on the business community planning

1:02:37 of the,

1:02:38 of the,

1:02:38 um,

1:02:38 banking institution from whom they are accessing

1:02:41 the payment system.

1:02:42 And if that institution is not,

1:02:43 um,

1:02:44 uh,

1:02:44 is not able to offer,

1:02:46 uh,

1:02:47 continued availability of the services,

1:02:48 then they might be impacted.

1:02:49 They're also largely interacting with their customers in cash.

1:02:52 They do not offer many

1:02:54 additional payment services,

1:02:55 so I think,

1:02:56 uh,

1:02:56 the customers of 5 might be significantly impacted,

1:02:59 um,

1:02:59 uh,

1:03:00 and this is an area which needs attention.

1:03:02 Um,

1:03:02 there are,

1:03:03 uh,

1:03:03 approaches by which,

1:03:04 um,

1:03:05 I think one can onboard the microfinance institutions

1:03:07 onto some kind of a shared platform,

1:03:10 uh,

1:03:10 for them to do,

1:03:11 um,

1:03:11 uh,

1:03:12 offer digital payment services to their customers from the shared platform,

1:03:16 uh,

1:03:16 but,

1:03:16 uh,

1:03:16 it's not very clear whether these things can be done

1:03:19 in a very quick manner.

1:03:20 Maybe,

1:03:21 uh,

1:03:21 some limited services could be offered,

1:03:23 but to allow them to offer the full range of services.

1:03:25 Uh,

1:03:26 in a very quick time using the chat platform

1:03:28 might not be feasible,

1:03:29 but there could be some services which could be offered.

1:03:31 OK,

1:03:32 uh,

1:03:33 thank you very much,

1:03:33 Harish.

1:03:34 So let us then close here,

1:03:36 uh,

1:03:36 a couple of,

1:03:36 uh,

1:03:37 uh,

1:03:37 uh,

1:03:38 points,

1:03:38 uh,

1:03:38 as I mentioned,

1:03:39 we will share the presentation,

1:03:41 uh,

1:03:41 the presentations.

1:03:42 Uh,

1:03:42 we will also send,

1:03:43 uh,

1:03:44 um,

1:03:45 a link to an evaluation,

1:03:46 uh,

1:03:46 form,

1:03:47 so please,

1:03:47 uh,

1:03:48 um,

1:03:49 uh,

1:03:49 complete the form kindly so we can have,

1:03:51 uh,

1:03:51 your feedback.

1:03:53 And,

1:03:53 uh,

1:03:54 um,

1:03:54 so I want to announce that we will have uh uh some more of these webinars,

1:03:58 uh,

1:03:59 again on the,

1:04:00 around the different aspects of,

1:04:02 uh,

1:04:02 uh,

1:04:03 um,

1:04:04 payment systems and,

1:04:06 uh,

1:04:07 uh,

1:04:07 during this,

1:04:07 uh,

1:04:07 the,

1:04:08 the crisis and COVID-19 and so on.

1:04:10 Uh,

1:04:10 so please,

1:04:11 uh,

1:04:11 uh,

1:04:12 stay tuned and uh you may uh receive uh

1:04:15 Um,

1:04:16 uh,

1:04:17 more,

1:04:17 more invitations and we hope you,

1:04:19 uh,

1:04:19 found this,

1:04:20 uh,

1:04:20 interesting and,

1:04:21 uh,

1:04:21 are interested in joining again and if there are suggestions on,

1:04:24 on topics

1:04:26 that you think might be,

1:04:27 um,

1:04:28 uh,

1:04:29 interesting,

1:04:30 uh,

1:04:31 uh,

1:04:31 do let us know and,

1:04:32 uh,

1:04:32 if possible,

1:04:33 we will address,

1:04:34 uh,

1:04:34 see Harish is sharing some links

1:04:37 also to the,

1:04:38 uh,

1:04:38 to the materials and the reports he,

1:04:40 uh,

1:04:40 mentioned and we will,

1:04:41 uh,

1:04:41 also circulate them via email.

1:04:44 Uh,

1:04:44 later,

1:04:44 and with this,

1:04:45 uh,

1:04:45 let me,

1:04:46 uh,

1:04:46 thank,

1:04:47 uh,

1:04:47 once again Harish and Akima for their presentations.

1:04:51 Uh,

1:04:51 uh,

1:04:52 let me thank,

1:04:52 uh,

1:04:52 also all the colleagues from the,

1:04:54 um,

1:04:55 uh,

1:04:56 Knowledge hub in Kuala Lumpur in Malaysia,

1:04:58 Wei and,

1:04:59 uh,

1:04:59 and Lusita and everyone.

1:05:01 Thank you very much

1:05:02 for,

1:05:03 for organizing this and for your,

1:05:05 uh,

1:05:05 for your support during the,

1:05:07 uh.

1:05:07 Um,

1:05:08 webinar,

1:05:09 which has been,

1:05:10 uh,

1:05:10 silent but very precious,

1:05:12 so thank you very much.

1:05:14 Uh,

1:05:14 and,

1:05:14 uh,

1:05:15 and of course,

1:05:15 thank you to,

1:05:16 uh,

1:05:17 all of you for joining and uh please uh stay in touch and we hope

1:05:21 to

1:05:21 see you again soon.

1:05:27 Thank you,

1:05:27 Marco.

1:05:31 Thank you.

1:05:32 Bye-bye.

1:05:33 You,

1:05:33 yeah,

1:05:34 thank you,

1:05:34 everyone.

1:05:35 Have a nice day.

showAllTimestamps

no

transcript

Hello and thank you for joining this webinar. I'm Marco Niccoli, a senior financial sector specialist at the World Bank's Finance Competitiveness and Innovation Team for East Asia and the Pacific. It is a pleasure to welcome all of you. We have connected representatives of central banks and regulators in the region. Payment system operators and payment service providers. International organizations, uh, colleagues from the World Bank, uh, consultancies, and, uh, uh, also the media. We have over 200 registered participants, and we thank you for your interest in joining us today. Today we will discuss digital payments and remittances at the time of COVID-19. Uh, on the one hand, we will address challenges and risks. And the measures central banks and regulators are taking. On the other hand, we will discuss how digital payments can help during these times of crisis. Let me then introduce. Our speakers for today. We have connected uh Miss Akima Elalami. Uh, she's, uh, uh, director of the payment systems and instruments oversight and financial inclusion department, uh, at the Bank Al Magrib, the Central Bank of Morocco. Thank you, Akima, for joining us today, and it's, uh, late hours for you in Morocco, so special thanks for, for making the time. And then connected from Washington DC we have uh our colleague Harish Natarajan. He's a lead financial sector specialist in the finance, competitiveness and innovation global practice at the World Bank, and he leads the global team. Working on payments and market infrastructures. So we thank both our speakers and all our participants. And let me then leave the floor to uh Ms. Akima. To give us an update on what the Central Bank of Morocco has been working on in the last Few months, thank you. In Morocco, the promotion of electronic payments starts very earlier with our first strategic plan in 2003. For that, we start by putting in place modern financial infrastructure that could support the development of the affairs on a sound basis. We also focused on interoperability, which is necessary. To avoid the fragmentation of the markets and to lead to the augmentation of cost. We also introduced some reforms, and our latest reforms, we introduced a non-bank institution which are allowed to open payment accounts and offer the new digital payment services like mobile payment. The main goal of this reform is to introduce new competition in the markets in order to reduce costs for consumer and customer and to offer new products which tailored for the needs of people with with our financial inclusion. Strategy. We put the promotion of in the heart of our strategy. We launch a mobile payment solution. Indeed, our roadmap gives particular interest to this new channel which offers opportunities for the financial inclusion of the different segments of the population. Making financial services accessible at a lower cost, so mobile payment is natively interoperable or operable. The user will be able to make a payment or transfer to an individual or a merchant regardless of the payment institution or the bank issuing the wallet. For that, with the consultation with all the stakeholders, the central bank put in place the common rules first to mitigate the risk, the mobile payments, and also consumer protection against the fraud and other risks. We also have capped the interchange fee to lower cost and to payment large adhesion of the merchant to this mobile solution. It not only reminded us the importance of speeding up the process of implementing this roadmap, but also mobile to authorities to undertake specific measures relating to financial inclusion and free usage of electronic payments. Allow me to start by sharing with you the experience of our government cash aid given to. segment of the population, as we know, experienced during this pandemic has demonstrated that a range of programs and transfer modalities can prove effectiveness in protecting households in Morocco, the government has considered direct transfer to protect poorest households operating in formal sector and Whose professional activities have been affected by the crisis, we know that for people living in the ultra poverty, such cash support can be a lifeline. As soon as the government announced the containment measure due to the health crisis, thanks to agility of all stakeholders, a committee was quickly formed by a different central bank. The Ministry of the Interior for the qualification of Target population. It was a declarative process based on dedicated digital platform. In the central bank, we coordinate the operation with banks and all the payment institutions. We manage operational aspect of distribution and the Minister of Economy and Finance, uh, manage the dedicated funds. Therefore, thanks to resilient and agile banking infrastructure, as well as a fully operational payment system in business community plan, the operation was quickly modeled by designation of leading banks. Which ensure the link between Interior Ministry and banks. And payment establishment for the processing and distribution of eggs. The beneficiaries were dispatched by establishments and by locality and by day according to the processing capacity of each withdrawal point, the popularity of the network, and the number of beneficiaries by locality. This operation has been slid in time. Each institution has set up a notification. system by SMS that are gradually sent to the beneficiary to avoid crowd movement that will be against sanitary measures, and we have served 3 million households, and all the beneficiaries were served by ATM or government institution branch or a bank branch. I will just focus on the idea that the target population was covered thanks to the popularity of the physical network. And ATMs and only small localities remoted locality were addressed by mobile agencies. In addition, Ban Marib, our central bank, continues its efforts in close collaboration with banks and payment institutions to encourage digital payments, and particular mobile payments by taking several initiatives. Including first, making it easier to open payment account remotely as in until the end of June of this year for QC requirements for the opening of Level 2 payment account. This payment account is capped at $500 American dollars by requiring only a scanned copy of the national identity card. And the mobile phone number. We also introduced amplification of the enrollment of merchants for the acceptance of mobile payments, which now can now be made on the basis of the production of the sample copy of the national ID, the patent number. For financial markets infrastructure, we have also assisted specifically retail payment system, namely the ACH and the SWIT, in implementing the necessary measures for their continuity of business, particularly in the management of critical human resources involved in the payment and the settlement process. All of this measure aims to promote the use of digital financial services at the best. Foundation and support financial inclusion development. That's a brief overview of all the measures taken by our central bank. But before to finish this brief presentation, I would like to focus also on the challenges of this digital financial services. With the promotion of DFS, we have to deal with many challenges. First, the lack of the financial education of the targeted population, and for that we have to support them by dissemination. Creating good practices to adopt, explain how they can benefit from governments else, protect themselves against fraud, and etc. We have also to establish a trust relationship between institution and target segment, and for these targets, media channels such as television and radio can play an important role in this context. The use of DFS also increase the risk, such risk of fraud. Uh, the cybersecurity risk, the consumer protection and personal data, and also the money laundering and financial and financing terrorism. So this is necessary in the central bank to have, uh, and to increase, increased vigilance and supervision of different actors using financial technology, but also work on putting in place a good oversight function and to monitor. Function within the, the central bank. I, uh, I hope it was useful for, uh, for you, and, uh, if there is any question, please, uh, please go. Yes, thank you, Akima. Um, I hope you can hear me well, and, uh, uh, I, we have a couple of questions. Um, uh, one is, uh, uh, from, um. May I know what payment account constitutes and if this, if payment accounts constitute includes credit cards as well. And the second question if the measures of Bank of Maghrib included revising any transaction transfer limits for mobile money for the payment account, it's the account that we can, the payments institution can offer some financial services, include a debit card. Not a credit card but a debit card, but aren't allowed to give credit to consumer, but just offer payment services to for the mobile payment for this payment, but It's capped to the level of the payment account and we have the payment account. We have two kinds of payment account one with $500 and the second it's capped to around $2000. OK, thank you. uh Aish, over to you. Uh thank you Marco and thank you Hachima for um for giving us a good, a good overview of of Morocco. Let me start by wishing, um, many of the colleagues observing the Ramadan, Ramadan Kareem, and a good morning to, uh, to everybody. Um, what I will, uh, share now is in some sense, um. An aggregation of all the things that Morocco has done, but, uh, but trying to put it in the framework of, um, of how we are seeing it, uh, across different parts of the world, and, um, many of the examples I will quote will, will resonate, uh, with what, uh, Hakima has been mentioning, and that is one of the reasons why we invited Hakima to, uh, to, to present. And I think they have taken a comprehensive range of actions. Um, so, um, I, I think, uh, uh, everyone, everybody will agree that these are, uh, very unprecedented times, um. Uh, and a lot of different challenges, uh, almost everything we do is being impacted, uh, and, in some ways I think payment systems are part of the solution as well, as a solution, as well as perhaps impacted in some ways, uh, by this crisis. So I'm, um, putting by the theme of my presentation to be getting funds to those in need and enabling access, and this is based on, um, uh, some of the work we've been doing, uh, which clearly shows that. Um, ensuring that people have access to payment services is a critical element of the, of the overall crisis response. So, um, what I will be doing is, um, uh, I will talk about, um, at a broad, uh, high level, what are the, what is the impact of the crisis on payment systems and services, provide a set of examples on the policy responses, and then take two very specific, um, and, uh, use cases related to payment services which are attracting a lot of attention at this point. Uh, is the government to person payments or social benefit transfers, um, as it is generally known, uh, and, and also, uh, the impact on the remittances market, um, and I then, uh, some reflections from my side on what could be the implications on the future work of, um, the World Bank as an institution, and I think more broadly also the central bank community. Um, but before I start, uh, maybe it'll be good to, uh, revisit some of the terminologies. I know many of, um, the colleagues joining off from the payment systems department of the central bank, so please bear with me, um, so that kind of the people who are not familiar with these terms, um, uh, follow, follow, follow the discussion, um, um, kind of, uh, uh, are able to follow the discussion as well. Uh, so in, in, in my discussions whenever I refer to payment service, I'm referring to services which are used by, uh, by people like, uh, you and me, uh, individuals, uh, to, to kind of make a payment and receive a payment, and these include things like, uh, debit cards, uh, includes credit cards, includes, uh, prepaid cards, uh, internet banking transfers, mobile money, um, uh, and then also withdrawal of cash at the ATM, uh, at ATMs at the agent locations, and so on. So, basically, uh, all of that is classified as payment service. And payment system are the centralized infrastructures which um allow different participant different financial service providers uh to connect and enable offer services to uh the customers of another financial institution um and then also the um the concept of interoperability uh essentially allowing the customer of one particular payment service provider to be able to use the transaction channels of another provider, uh, and also being able to send, uh, and receive money from customer of another provider. Um, and the, the distinction is important between servers and provider system is if a particular payment service provider is down, uh, the payment services offered by them are impacted. But if a payment system is impacted, then potentially all of the payment service providers in the market are impacted. Uh, and similarly, if there's an access channel which is impacted, only the customers using that particular access channel are impacted. So I think it's important to keep this distinction in mind, um, as, as we talk about it. And I'm using the payment system in, in a very generic way, uh, and of course, as, um, as all of us know there is a concept of a scheme, uh, which are basically the rules based on which the system performs and rules based on which the payment service is conducted, um, and that determines things like what is the fees paid, what is the interchange. Rate, what is the limit of the transaction? What are the authentication requirements and things like that? And those are the rules behind a payment service, um, and the payment system and the scheme put together kind of form the functioning, uh, of the, the overall infrastructure. So with that, let me move on to, uh, the core substance of, uh, what we're discussing today. Um, we are seeing broadly, uh, three sets of, uh, uh, different impacts. Um, the first one is, um, there's a significant impact on the availability of cash and cash-based, uh, payment services. Uh, so this includes, um, getting access to cash from banks, bank branches, from, um, uh, locations, agent locations as we call it, uh, for remittances, for mobile money transactions, um, and then so on. Um, so at one level, while cash impacts kind of individuals, uh, who, uh, who are already banked, but who, who, uh, wish to transact in cash, it impacts them. It also impacts people who have access to mobile money, who use it for a set of transactions, for example, but for, uh, bulk of their, uh, uh, or a set of their other, uh, needs, they use cash, and because of that they have to, uh, activate implications to, to withdraw cash. It could also impact businesses which might be um collecting the digital payments, but to pay their suppliers they might have to go and um deposit uh go and withdraw cash from their um uh bank branches and give the cash to their, Uh, to their suppliers, or it could happen to vice versa that they collect cash, have to go and deposit in their bank, uh, to, to be able to pay their suppliers in digitally, right? Uh, so cash impacts both individuals and businesses. It impacts people who are banked. There's also people who are, uh, unbanked. It, uh, it affects people with different payment instruments. So, um, uh, so just because you have access to a digital payment mechanism like, like a mobile money or, uh, or mobile, uh, wallets, um, uh, in mobile banking doesn't mean that you're not impacted. Um, and also an interesting point here is, um, many of the agent locations are, um, are actually, uh, in many cases, in many countries, um, uh, uh, including in Southeast Asia, in some countries, uh, they're actually small grocery shops and, um, uh, corner shops, basically. Uh, the main line of business is something else, and they offer the aging services, um, uh, as an additional service. Um, and because of all the social distancing and lockdowns and so on, the main line of business might actually be going down, uh, might have to be shuttered because of which they have to also shutter their, uh, agent services, or even if they're open, um, say for restricted hours, the main line of business might actually not see much transactions, so they might not have the liquidity to be able to support, uh. The transactions at these locations, and this is something which we have seen in many countries now, um, and, uh, and this is a big, big, big, big problem, uh, and it becomes very difficult to enforce because even if the government declares these are essential services because of this joint, um, work which is done in the sense that this is not a standalone service, but it's offered along with something else. Makes it more difficult to, uh, to really enforce it, and in particularly in larger countries where the, uh, uh, the law enforcement on the, on the ground is the one who's enforcing the regulations, or the guidelines from the government might not fully understand uh what is essential and what is not essential. Uh, it is very easy to understand when you say banking is essential, you know, a bank branch, what it looks like, but you might not have the same conception for an agent location. So I think because of all these factors, uh, there's a big impact on the availability of cash and cash-based payment services. There's an added dimension where, uh, there are some concerns expressed in some quarters about cash being a vector for, uh, for transmission of the disease. Uh, this, uh, this, of course, this, this motion has been very strongly countered by, by many central banks. Um, including, um, uh, including the DIS came out of the paper, uh, contesting this point and, and said, uh, cash, there are, uh, the risk of transmission through physical currency and notes and coins is limited, but at the same time, um, there are, uh, clear perceptions, and, um, and there, there's some kind of a fear in the minds of the minds of individuals and businesses. Uh, so very clearly that is also demand driving a big demand for, uh, digital payments, um, and the demand for digital payments is coming in from people who have already had access to it but had not been using it actively, or, um, or, uh, or they're not fully familiar with the functionality, so many of them are learning how to use it. Um, and in that sense, um, this is leading to a big jump in, uh, in digital payments. It's also because a lot of transactions were perhaps physically done in cash earlier are now moving to, uh, online e-commerce and things like that. That also automatically means the payments are also digital, uh, even if there's cash on delivery, uh, because of the concerns around cash, people are switching to, uh, the switching to digital payments. Um, this is, of course, kind of, um. Um, uh, raises a concern whether the system's volumes will be able to take care of them, take off this increased volume volumes. But the good news is that many of the, uh, as a, as a matter of practice, uh, the payment systems are, are designed for peak capacity, um, and the peak capacity in many, many cases usually 3 times the normal, uh, transactions. So in that sense the systems might be performing at a peak load, uh, but they're holding up, you know, that's the general, general impression we're getting. There is also a drive towards increasing the, uh, usage of digital payments. Coming in from the uh uh from people who are unbanked um and who are now forced to switch to digital to carry on their lives um and a good portion of that is also coming in because the governments are actively in raising digD payments uh to provide relief to to individuals, and I'll talk about that, um, in a separate segment. The third area, uh, is that, that, um, there's a heightened concern around the. Risks to the smooth functioning of payment and settlement systems, uh, from, uh, three different angles. One is operational risk, uh, and this is simply, um, largely and simply because of the unavailability of critical staff to carry out the operations of the systems. And this, uh, crisis is not like, um, like a, uh, like a natural disaster where you might say that the main site becomes unavailable, and, uh, you can. Uh, immediately switch operations from the backup side, um, so, um, so that you can, uh, you can, uh, switch on from a backup, backup side, uh, uh, assuming, of course, that you have the staff to, to carry on the operations from there, whereas in this crisis, the entire nations are being locked down, so it doesn't matter whether you have a disaster recovery site, you have staff there or not, uh, the physical availability of critical staff becomes an issue, uh, nevertheless, you know. Uh, and it's not just the staff of, um, of the institution operating the payment system. It is also the critical, uh, service providers whose staff might, uh, again be unavailable, and this could mean things like, you know, IT, um, hardware maintenance guys, networking, uh, and in some cases even catering potentially, no, um, uh, and, uh, there could also be concerns related to system capacity, as I mentioned, um, they could also be increasing, increasing operation. Uh, which might be constraining the, uh, the system capacity, um, uh, and then also giving very little time for the IT staff to maintain the systems and, and then so on, um, then, uh, closely related to the operational risk is also, um, the heightened IT and cybersecurity risk, and this, um, a large reason for a portion, a large, uh, reason for this, uh, is because individuals are working from home, because staff are working from home. They might not have the necessary. Uh, IT security on the devices and, uh, authentication, uh, for accessing systems, uh, and also they might not necessarily be fully familiar with working remotely, um, so they might be, uh, opening up an attack. The attack surface for cyberattacks could actually be increasing. Um, and this applies also to individuals who are using the services, the customers, customers of the institutions. Uh, there are numerous cases of, uh, phishing attacks coming on, um, uh, kind of taking advantage of people, um, who are unfamiliar with the digital payments now, moving on to digital payments, and also because. Um, at this point there are quite a few, um, uh, social, um, uh, kind of donations, etc. solicitation for donations which are coming up. Some of them are, of course, genuine, and some of them are, are plainly phishing attempts. So a lot of, um, customers are, are falling prey, uh, to such attacks, uh, and then the last point, uh, last transmission channel of the risk is, is more on the, on the credit and liquidity risk, uh, predominantly starting as a liquidity risk. Uh, and these are, uh, related to, uh, participants in the payment system. Uh, let's say a commercial bank is unable to, um, uh, uh, kind of, uh, uh, apply liquidity for the functioning of the payment system because their money perhaps is locked up in, in another market, and, um. Market, uh, there's a lot of volatility and because obviously they don't have enough money to, uh, to place as collateral for the intraday liquidity in the payment system, um, so there could be liquidity risks which, which might come up and that liquidity risk could transmit, uh, and translate into a credit risk, um, if left, uh, unmitigated, um, uh, and at this point there's been a lot of responses from the central banks, um, to ensure liquidity, adequate liquidity to the banking system. Uh, and at this point we have not seen any case of, um, uh, uh, kind of a failure in a payment system because of a participant having, uh, not having liquidity, but this is an area which needs to be very closely watched, uh, in particular, uh, on fast payment systems where, uh, liquidity needs much higher, uh, in particular during extended periods of, um. Are doing extended periods of um uh operation um where the liquidity uh uh infrastructure is not available, for example, a weekend or perhaps during week break which will come up, come on, coming, uh, in a few weeks, um, there could be extended periods of holidays the banking system might not be working, uh, plus any, any, uh, risks might actually become much bigger, you know, in such periods, uh, so I think, um, and also we could be increasing participation of non-banks in the payment systems. They might not necessarily have access to, uh, to liquidity, and that that is also an area which needs to be, uh, looked at, uh, moving on to the policy responses, um, and I'm, and I'm grouping them, uh, into a few categories, and one of the categories is about supporting people who are not banked, uh, to get access to, uh, to, to open accounts and, and also people who are typically not activated some service like, um, like you have a bank account, but you use the debit card, but you've never used internet banking, uh. There is a, there is a process to, to kind of follow for setting up, um, access to your internet banking, and I'm including all of that under the general bucket of simplified customer due diligence and, um, and electronic KYC. So many, uh, countries we are seeing are, um, are simplifying the requirements for opening an account, and this also broadly applies, uh, to kind of active. of certain services, um, and, um, this started, uh, we are seeing a big, big, uh, driver for this is, uh, is primarily for allowing new individuals, new recipients of government benefit transfers, uh, to be able to receive it digitally, and I will, I will talk, uh, a little bit in more detail, uh, a little later in my presentation. A few examples are, uh, countries in East Africa and West Africa where the mobile money penetration is significant, mobile phone penetration is, is good. Uh, they're, uh, they're allowing, uh, new mobile limited purpose accounts, basic accounts to be opened using the mobile phone registration details, and, uh, and these are, of course, um, these have to be combined with, uh, with adequate risk management measures, uh, primarily with respect to lower limits on the account, uh, limited, uh, transaction amounts, and perhaps, uh, at some point to regularize them, uh, and then make them standard accounts, you know. Um, and we are also seeing, um, uh, kind of government to person programs in Brazil, Jordan, and, I'm just giving a few examples where they're conducting remote enrollment of beneficiaries to open, uh, electronic wallets, and the, and the information to open the account is coming in from the social registries of the government. So the individual is already known to the government, and it is treated as, uh, adequate, uh, basis for opening an account for an individual and, uh, and seen as adequate to meet the, the customer due diligence requirement. And here I would draw your attention to a press release, uh, press statement by the FAA, um, uh, the Financial Action Task Force, which basically talked about, um, the full availability under the risk-based, um, KYC approach, uh, for such approaches, and, and they advocated for fully, uh, taking advantage of all the flexibility available, uh, as long as there's an adequate analysis of the, of the risks, uh, and the second area. Is, um, uh, is, is also relaxation of authentication requirements, and this is primarily being seen in, in Europe in countries where there's quite a, quite a good penetration of contactless payments, uh, whereas, as, uh, as all of you know, typically contactless payments come with, uh, without PI for, uh, transactions typically below $50 or $25 in some jurisdictions. Um, and, um, uh, and, uh, and for transactions above that you're required to enter the PIN, and again the same logic that, uh, people are afraid to, uh, touch surfaces which they're not familiar with or where they're not, they're not sure about whether it is clean and so on, uh, so there are, uh. Countries which are changing the limits for conducting contactless card and contactless mobile payment transactions without having to enter the PIN, and they increased the amount and I think they increased it to €75 if I'm not wrong in almost all the European countries. Um, and then similarly, uh, we're also seeing, uh, some countries, um, where they're saying that cash just continues to be a legal tender, continues to be accepted as a means of payment, and they are putting out, uh, recommendations that all retailers are required to accept, um, continue to accept cash as a means of payment. Um, there are also, uh, some, uh, uh, some central banks have, uh, issued instructions that banks have to maintain adequate cash in their ATMs. They're opening up dedicated, um, and, um, and pooling in the cash distribution networks of the entire banking system to ensure that cash is made available, and ATMs in some cases also to ensure that, uh, uh, supply of fresh currency notes into the system, uh, through using ATML as as a channel. Uh, in related to all this, um, uh, uh, with respect to, uh, new means of payments being introduced, uh, we kind of access to, um, uh, the kind of new customers coming onto, onto payment systems, uh, availability of cash, uh, being a challenge sometimes, then, uh, huge interest of customers to avail new services. Um, all of the, the, uh, and this in the context that bank branches and others might not be physically accessible is driving the need for, uh, introducing other channels for customer support. Um, almost all the banks nowadays have, um, a contact center, call center, but they might not be fully staffed. They might not be functioning 24/7. Um, so many countries are putting. Requirements that uh these call centers have to be open longer, uh, have to be staffed better, and this also introduces the operational risk I was mentioning earlier, because very often this might have been outsourced, um, and these people have to now perhaps work from their homes might with the unreliable telecom, um, uh, network and quality. So it also is a dimension of the operational risk I was mentioning earlier. Uh, and there's some central banks have started using, um, chatbots, um, uh, specifically deployed during COVID to help in, uh, automating, uh, many of the customer service queries, uh, and we're also seeing, uh, some of the mobile money providers and some banks, uh, using social media channels like WhatsApp, uh, and other channels to, uh, to interact with their customers, uh, including, including open accounts, and in some cases we have seen also to open merchant, uh, uh, uh, accounts. Um, the second, um, the, a broad area we are seeing is promoting and ensuring availability of digital payments, and here at one level it is simply about promoting the adoption, and I think a very good example of us, this is the monitor part of Singapore. They came out with very, very strong, um, uh, kind of awareness campaigns for the adoption of digital payments, in particularly the Pay Now, I think, uh, service, um, which is a fast payment service there, uh, in coordination with the banking sector. Uh, there are also other countries like, um, Albania, Bangladesh, Argentina, and there's a few others who basically they in some sense use moral suasion, uh, encouraged to request, um, the, uh, providers to eliminate, uh, fees on digital payments, um, and, and in other such services, um, to basically to enable, uh, customers to move, uh, in a big way to digital payments. And then, many countries in, um, Africa. Uh, have raised transaction limits on mobile money operations, and this is basically as typically as a risk management measure. Uh, mobile money accounts come with certain limits, uh, both daily limits, um, uh, as well as monthly limits in some cases, both volume and value, uh, and also some limits on how much money you can keep in the account. The other example is, um, uh, the Central Bank of Lithuania provided emergency liquidity support to payment service providers, and this here is particularly, I'm referring to non-bank payment service providers, uh, and not, not the, not the banks, uh, who of course had liquidity support. Um, uh, carrying on continuing on the promoting digital payments, um, there are also significant initiatives we're seeing, uh, uh, you kind of providing incentives for adoption, um, uh, and a good example of that is Palestine where, um, uh, many banks have actually started providing incentives to customers to use digital payments. Um, and there are cases where QR codes are being very widely deployed now, um, uh, for, for making it easier for merchants to get access to, um, uh, to access digital payments, and, um, very simple merchant platforms are being rolled out. Um, including in some cases like Spain and also Jordan, that e-commerce platforms are being created to help shoppers, to, uh, retailers to, to, to kind of manage their purchases which typically they were doing physically, but now they're moving, uh, helping the banks are helping, uh, these merchants move to move to e-commerce. Uh, in many cases these are first-time e-commerce merchants, um, and there are also cases where, um, uh, ATMs typically, um, many countries are simply allow only allow cash withdrawal. Um, of course there are ATMs which accept cash. Uh, many of the ATMs in general are, are designed to also accept cash, but typically it's not turned on. Um, and many banks are now, uh, in many countries are requiring ATMs to also start accepting cash, and a good example of that is, uh, is Kent. Uh, and a, and a related point, uh, I mentioned earlier about the challenges with respect to cash, there's also another dimension which is being, uh, which is, which is being seen in some countries, um, a check settlement, uh, or check as a payment instrument, uh, is being impacted because the check clearinghouse functionality in many countries still involves a manual process. So even if you're using check truncation, it still requires the individual, uh, who's presenting the check to still appear in person. Um, many countries still don't have the remote capture, as they call it, uh, allowing a person to capture the check-inage on the mobile phone and transmit it. Uh, many countries don't have that, so, um, many countries don't have check truncation. So even if countries have check truncation because the physical exchange of checks is required, um, uh, many, many central banks have, uh, suspended the operations of, uh, of. Check, um, um, kind of, uh, check clearing houses. This, of course, has implications for, uh, customers who had, um, uh, kind of, uh, uh, banks which had, uh, banks and other, other lenders who might have collected checks as a postdated checks for, uh, for kind of as a standard instruction, no, for, uh, payment of mortgages and payment of other loans. They might get impacted. Um, uh, there, there could also be implications for, uh, uh, commercial, um, uh, kind of commercial traders who might have collected, uh, checks as, um, uh, postdated checks as a mechanism to, uh, to kind of, uh, uh, in, in some sense it's a collateralized lending. The check is acting as a collateral in some sense, and the check, uh, is to be presented at a later point in time, and they are perhaps unable to present it now. So this could also lead to, uh, lead to liquidity risk. And because of this, uh, this issue. Uh, there is also an increased pressure on banks to promote digital channels, uh, and in some ways they're also helping customers to convert the check into some kind of a debit, um, a direct debit instruction, uh, based on certain procedures where, uh, the check information is, uh, transmitted to them. Uh, some details are transmitted that is kept on the file, and then they try to convert it into, um, direct debit instruction using the check as a, as a mandate. Uh, these are some of the examples we, we assume. Uh, and also, uh, bank branches, while not necessarily closed, uh, uh, in many cases are being asked to restrict the operating hours, uh, because of the challenges the staff might face in, um, uh, in, in accessing the branches, and then also because some of the payment systems operating hours are also being, um, are being shortened, uh, to kind of avoid, um, uh, liquidity risk which is coming in when the system is open for a long time. And the banks are unable to participate, uh, then you might create a liquidity risk in the system because some other participants who are continuing to function might expect payments, uh, or they might make, make an instruction, but that might not be a fully processed because the, uh, because the counterparty is not available to, to act on it, um, so because of all these reasons we are seeing, um, the operation hours of the bank is reducing, we are seeing suspension of the check clearing houses, so all of this kind of puts more pressure on, on, on digitization. Um, then coming on to, um, some of the policy responses with respect to risk management, uh, um, uh, we are seeing significant emphasis on business contriity planning. Some countries have invoked business continuity planning procedures for the, uh, operations of the core payment systems like RTGS and, uh, depository for government securities, and, uh, including also the capital markets. Um, uh, there's also, um, been, uh, cases where, um, um, uh, some of the central banks have asked for validation of the business continuity plan of, um, of some of the, of the, some of the continuing institutions. Um, CCP is having a lot of attention, uh, at this point because, um, uh, kind of, uh, as the central counterparties kind of concentrate the risk in the, in the capital, um, and money markets. Uh, and if they go down, it has a big systemic implication. Uh, there have been, there's been one instance, one recorded instance at this point of, um, uh, participant in the Chicago Mercantile Exchange, um, uh, actually defaulting, uh, unable to meet the settlement obligation because of which the CCP had to step in and auction the assets. Uh, other than that, we have not heard of any instances, but very clearly there is quite a bit of volatility in the margin requirement, uh, at this point, um, not just in the, um. Not just in the um um uh not not not specifically in the uh the initial margin but certainly on the on the daily margin variation margin uh a lot of um many intraday margin calls and so on. Uh, then, um, there's quite a bit of, uh, uh, relaxation of the reporting requirements. Uh, uh, a lot of central banks are, and banking supervisors are, are kind of doing regulatory forbearance on, uh, on some of the prudential requirements, but we're also seeing some, uh, relaxation on the, on the reporting requirements, um, with respect to the typical statutory reporting which is required, uh, maybe sometimes when they might have been up for renewal, the renewals are being extended. Um, and, and things like that, uh, and then lastly on cybersecurity, I, I mentioned the heightened risk of cybersecurity. There's quite a bit of attention on this topic at this point, um, and, um, a few cases, um, central banks have been, uh, uh, kind of reviewing the, uh, uh, financial institutions cybersecurity plans. Uh, banks are increasing anti-phishing campaigns, um, and some banks are, uh, offering free digital services. Digital signature services to their customers, uh, to help them kind of avoid having to, uh, exchange sensitive documents over, over, over email. So with this, let me quickly move on to one of the specific use cases on the government to personal payments, and this, this context is basically, uh, typically governments have two types of, um, social protection programs. One at one level is the people who are. Uh, who are not, um, who are not in the formal sector, who fall below a particular, uh, threshold, income threshold, they are typically covered under a social protection program, uh, and these are basically grants given by the government to the very vulnerable people. Uh, and then there are people who are employed, um, in the formal sector, and if they lose their job or, uh, they have some, uh, some other, uh, some other, um, accident and so on, they get covered under a social insurance program. Typically, the premium is contributed by the employer. Uh, so what we have seen here is the formal sector workers, uh, if they're losing their jobs and they're going to claim money for the social insurance, the people who are, um, vulnerable, who are receiving the social benefit transfers, their needs are increasing because of, uh, whatever little income they might have got from some other business that is being impacted, so they need to be given more. Uh, and then there are people who are not, they were neither poor nor formally employed, and so they're not under the social protection net. Neither are they in the net of social insurance, so they are sometimes, some, in some sense they might fall between, uh, fall in the crack, and there are programs the governments are designing to include them, either make them, um, a participant in the social insurance program or make them, uh, participant in the social benefit transfer program. So for this segment which is coming in new, there's then a need. To create an account for them, being able to, uh, quickly enroll them, being able to transfer money to that and doing it in a way that is, um, that recognizes the social distancing issues, right? And I'm going to showing you two, mockups of, um, of, uh, cases where the cash is being physically distributed or they're being enrolled, uh, into the program, and you can see the logistical challenges they have to go through, uh, if you're fully conform with the, uh, the social protection, and the social distancing, uh, kind of norms. Um, so very clearly there's a need for very timely action both in terms of identifying who needs to be paying and also, uh, when, um, uh, kind of how, how quickly you open the account for them. It has to scale because many people are coming in. It has to scale in terms of rapidly changing the design of the program, and then it has to be accessible to the people because just by giving money to them is not enough. They should be able to access it and make their day to day, uh, payments to be able to take full advantage of the benefit transfers is coming. Um, then, um, on, on the remittances market, uh, remittances are a lifeline, uh, to, uh, to many countries, and this graph I'm showing on the x axis remittances included as a share of GDP, and on the y axis is the cost of remittances, uh, measured as a cost of sending $200. Uh, and you can see on the right-hand side, uh, there are at least 10 countries where the GDP as a, uh, remittance as a person of the GDP is greater than 15%. And if we take 10% as a, as a benchmark, then we have at least about 20, uh, about, uh, 30, 40 countries. And if you take it about 7.55%, we get about 60 countries where, um, remittances are a significant component of their, of their, um, of the GDP. And, and, and also in this context, uh, based on a recent projection by my colleagues in the macroeconomics department. The foreign direct investment is likely to fall. Uh, the official development assistance that is likely to remain flat, uh, and remittances has become even more important, uh, in, in, in many, in all, in, uh, in all country contexts in the developing world, at least, and certainly the countries where it was already a big component of their balance of payments and their GDP, it's going to become even more critical. Uh, and some of the implications of the remittances market are very similar to what I discussed, but there's just one point, uh, which, uh, which is important to highlight here, which is the issue of Forex vol volatility because of the volatility in the foreign exchange markets. Uh, it is becoming difficult to price the, um, uh, remittances, uh, services, uh, and we, we, we were apprehensive that this might actually lead to higher remittance prices, but at this point it looks like it is being absorbed. But it has to be, it's important to see how, how this holds up, um, uh, in the coming, uh, coming weeks and months. Uh, we, we launched a pulse survey, uh, which is done every week. Um, it includes a survey of, um, the private sector, the, uh, survey of regulators, and many of you in the region have kindly participated in that. And we're also doing a pulse survey, uh, all with respect to monitoring the cost of remittances, and that is basically showing it's a very complex chart, and I will, uh, leave it to you to look at it at leisure. But basically what this is conveying is that in general we are seeing, uh, actually a fall in the price of remittances, but it could be misleading because the number of providers in the market, number of services available for remittances are. Actually declining, so many providers are, are still functioning, but, uh, but at a reduced capacity. But the services they're providing, they're not able to provide the full range of services because of the, uh, various impacts, um, they're having to the systems, the staff, and to their operations. So as a result, the services which are available are primarily digital, and digital services are in general cheaper and, uh, than cash-based services. So because of that, we're seeing a drop in remittances based on the sampling you're doing, but it's, uh, it's not very, it's not very clear. Whether they can fully rely on that and then also, um, uh, many, many, many recipients, many remittance providers, uh, remittance senders might not necessarily have access to digital mechanisms. And even if they have, their family members might not be able to access it. So, uh, so maybe the loop is not closed. So because of it, there's, uh, people who have the money to send, they might not be able to send at this point, uh, and of course the medium term effect could be that they might actually lose their jobs and they might have to return back. So this is an area which has to be very, uh, closely watched. So based on this we um we issued a call to action um for the remittances market and um and just basically talked about that in the short term in the immediate and short term. Uh, we need to actively promote and enable adoption of digital means. We need to keep remittance services, essential services, uh, and we need to, uh, support the remittance service providers to manage the financial risk, uh, perhaps providing them some, uh, support on the foreign exchange, uh, uh, markets, providing some liquidity support, um, and enabling them to access the, the banking channels in a much more efficient way. And in the medium term, uh, we believe that the focus has to be on enabling new models for remittances which are coming into the market, uh, including interlinking of fast payments. Um, for example, in the Middle East, many of the countries are deploying fast payments in the, in the region in Southeast Asia, many countries are. Either have it or are introducing it and one can imagine um um uh kind of a scenario where some of the fast payment systems are interlinked uh making it um instantaneous to be uh to send the money uh and also since it uses some of the existing payment infrastructure the cost structure might be significantly lower, um, and they could we, we, we also believe that there has to be increased focus on the universal financial access, uh, to ensure that both the senders and the recipients are able to, uh, use digital channels, uh, and then, um, lastly. Um, access to the domestic infrastructure, um, uh, for the remittance service providers, uh, for example, many countries now Western Union is asking for access to the, uh, fast payment system in the country so that they can plug in. So on the origination side, it might be Western Union, uh, which originates the transaction, but they terminate at. The fast payment system in the country and then from there it is then distributed and this means that access policies might have to be relooked at maybe API based accesses or maybe enabling uh existing participants in the fast payment systems to also enroll remittance companies as their customers. Um, there are also new models of platform-based services which basically aggregate both outgoing and ingoing incoming transactions or aggregate transactions for the whole region. Uh, in some sense of a regional integration platform which could also be leveraged for remittances and in the REAN region, given their long-standing discussions on RCN pay, I think this is an area which needs to be, uh, closely looked at. And then lastly, uh, and that's why I put it at the center is a strong focus on AML and KYC. Nothing we do, uh, should compromise, uh, on that. Uh, in the interest of time, I could perhaps, um, stop here, uh, by just showing that, um. Um, we believe that this is the time now for, uh, um, for all the regulators and the international community to really double down on increasing access and usage of digital payments. There's got quite a bit of momentum. Um, many central banks are doing reforms which have been long pending, uh, including in the, in the, in the Middle East region where, um, Hakima comes from, and she can attest to the fact that, um. And she can attest to the fact that uh reforms which are pending for like several years, uh, have been done in a matter of weeks at this point. So we need to really see the momentum and I'm showing you, um, uh, a graphic from, um, a publication called The Payment aspects of Financial Inclusion, uh, the famous Poffy House which kind of talks about the Critical enablers and uh catalytic pillars. There was a recent update to that report, um, which, which talks about a, a passing deal, um, which brings in, uh, take into account all the new developments, and I think combining these two, is something which provides a good framework for us. Uh, some of the critical enablers we have identified in the, in the, the course of this crisis include, uh, the remote onboarding, simplified, uh, CDD, uh, simplification of the payment and acceptance platforms, coordination, incentives, and then also the, uh, consumer protection and education. Uh, and the importance of fast payments is also something which has been highlighted very, uh, very significantly in this crisis, and I think we need to really accelerate the rollout of fast payments across the world. And, uh, and some of you could see, uh, some of the examples, um, uh, from the region Pay now and the prompt pay on the, on the right. Um, then, um, this crisis has also highlighted the, um, the demand, uh, for, uh, unified, um, uh, government to person architecture, uh, kind of giving the functionality to be able to, at the press of a button, uh, being able to reach, um, you know, the businesses and individuals who are impacted by the crisis. Uh, the US government, uh, kind of announced a 350 $350 billion of relief, uh, but to get, get money across to, uh, across to the individuals, uh, they had to really struggle. Um, and I'm sure many, many countries, um, uh, kind of face the same problem, but countries which had invested in, in automating many of the steps, um, were able to do it in, in a matter of minutes, uh, to at least get the money to, into the individual's accounts. And here we are, we need to look at the complexity of the, of the government of person side. There are many ministries involved, many kinds of payments. One for teachers, one for, uh, students, one for, uh, old age, um, people, one for people who are, who are impacted because of some, uh, big event in the country, uh, and so on. And there are different channels which are used, uh, for each one, there's a separate program, separate identity. So I think we need to unify all of them in a way that an individual can choose where they want to receive their money. Uh, and there's a common payment system which is, uh, which is used in all the existing channels in the country in terms of acceptance points are available, uh, to, to the individual and being able to, uh, uh, enroll people, uh, rapidly, uh, and in a very quick fashion, and I think there's a, a vision for a unified, uh, GDP architecture, and the World Bank is working along with, uh, CAP and, uh, various other, um, departments within the World Bank, uh, to, to kind of, um, realize this vision. And then lastly this is a paper which um was actually published just today um uh with the World Bank by a vice president as a uh as a lead author and uh I had the uh privilege also to be uh of being a co-author on that paper and we here we envisage a four-step process, uh, four-stage process to move to a universal, um, uh, usage of digital financial services starting from the basic access to transaction accounts, then moving on towards more intensive usage, uh, and additional district financial services, and then widespread adoption. And I think at this point, very few countries are in stage 4, perhaps China, uh, maybe Kenya, uh, and I think there's enough, uh, there's significant room for, uh, an opportunity for, uh, many countries now in the region, um, in Southeast Asia to perhaps move from stage 2 to stage 3 and stage 3 to stage 4, and in some countries in, in Southeast Asia, perhaps that's still at stage 1. So with this, let me, let me conclude, and, um, I'd be happy to address any questions, and I'll, uh, I'll pass it back to Marco. Thank you very much, Harish, for the presentation. Um, there is one, question which, uh, quite elaborate, so I sent it over to you, uh, over your email, so I will give you the time to, uh, take a look and, uh, um, and respond. Um, Um, just to, uh, before I give the floor, uh, to back to Akima to answer the questions that, uh, came for her, uh, uh, hopefully she's still with us. Um, I just wanted to remind everyone, we, uh, will share the slides, uh, and, uh, uh, Harish, there is a request also to share the report you just mentioned, so we can, uh, we can get along with, uh, uh, perhaps other relevant, uh. Uh, links or materials. Um, so, uh, Akima, uh, over to you if you would like to please answer the three, questions. Yeah, um, thank you, Marco. Uh, the first question was about the professional, uh, the patent. What is the patent? It's a professional tax paid by merchants and, uh, some. A physical person who exerts some liberal activities and when they pay this patent they are given a patent ID to ensure that they are OK with the tax department. The second question was about who is conducting financial education in Morocco. We have implemented in 2013. Uh, or Moroccan for Financial Education. It's shared by by our governor. It's, um, it's like Oleg of Central Bank to conduct uh financial education. And I think the last question was about who assessed the merchants, who assessed the reputation of merchants. This assessment is belonged to acquire, could be a bank or a payment institution, and in central bank, we put some criteria likeability requirements for KIC also, but the assessment is belong to acquire. There was one more question, Akima, about how you supported the uh retail payment uh systems. We support the EMF by implementing the necessary measure for the continuity of of business. That's, that was the principal supports in this crisis in, in, in the, the start of the pandemic crisis. We, we implement with them the necessary measure for the 20 business of, of business. Thank you, Akima. Let me ask the floor back to Haddish and uh if there are any other questions, we still a few have a few minutes, so please uh send them through the chat so we can. Yes, um, and thank you, uh, thank you, Ricky, for your, for your question. Um, I hope you're doing well. Uh, the question, of course, is very, very valid, um, and, uh, things like, uh, NFC and contactless are, are not necessarily feasible options in all countries. Um, uh, this is, of course, just a mix of the policy options available, and as I said, many of the examples, uh, there was primarily related to Europe. Uh, and, um, uh, and you're right, uh, in saying that, uh, in particular when you want to expand digital payments very in a rapid manner, you need to pay, uh, pay attention to both the sending side of, uh, how do you get money into people's accounts, but also you have to take in, keep in mind how does the recipient use it, uh, and that is where I was making the point that, uh, even if you might, uh, be a user of digital payments, um, you might still need cash because of the context in which you live in. Uh, and even for merchants, um, uh, they might have a problem because their other payments might be in cash, um, so if they accept in cash and they have to make those two payments, they have a problem on cash handling. Uh, in another way, if they are receiving the two payments, but the suppliers have to be paid in cash, then they have a different problem. So I think, um, that is where I think is the biggest challenge, and many countries after a lot of, um, uh, have been very fairly quickly been able to get the right, get it right, um, get the process of putting money into people's accounts, opening new accounts. That has been, um, relatively more successful in doing that. But in terms of making available agent locations, making available merchants where they can be used, is a much more difficult battle, in particular to do in the, in the time of a crisis. Uh, there are a few cases where, um, uh, we have seen where, uh, bank, uh, banks have been encouraged to sign up new merchants, and this is the case of Morocco where, uh, she was talking about simplification of the CDD. Requirements for uh merchants to open accounts uh that is clearly an area and also uh faster wider usage of QR code-based uh payment mechanism that is very fairly quick to distribute um uh and these are some of the mechanisms, um, of AVRC, uh, and very clearly this is the, the real challenge in, in, in a crisis to, uh, to kind of, um, spur usage of digital payments. Uh, so Rick, I hope I answered your question. And in terms of fact of, uh, your question on FATA should relaxing requirements related to KYC, as I mentioned, they came out with the first statement, um, saying that, um, uh, banks, um, and the, the regulators have full flexibility, uh, in interpreting the risk-based assessment, uh, risk-based approach, uh, and they encourage them to take advantage of full liberty. And recently they also came out with guidelines on digital ID and how it can be used for, uh, for, um, uh, for, um, the remote account opening, uh, and remote onboarding and as you mentioned, the TFKYC is, is one of the approaches coming instead of coming in from a risk-based approach where you really analyze the risk of a particular payment mechanism and then you say that for this kind of accounts with a particular. Let's say less than $5. There the risk is matched by very limited, and you could just open an account based on just the, uh, declaration of the ID number, um, and then capturing some details. Uh, a tier above that could be where you have to might have to verify it, and a tier above that you might ask for additional documents. So clearly the tiered KYC combined with a digital ID can be very, very powerful. Thank you. Thank you, Harish. OK. Um, so if there is any other, uh, last question, I will, uh, give, uh, uh, a minute, uh, and again, thank you, uh, in the meantime, uh, uh, thank you very much to Harish and, uh, to, um, Akima for their, for their, uh, very interesting and uh. And relevant presentations. Um, we Of course, uh, hope that, uh, uh, some of these, uh, topics will become history, but at the same time we know that the crises are always, uh. Around the corner and we, and it's important um. Um Prere for them, uh, and I think this, uh, uh, will, uh, uh, be an, an opportunity, uh, for, uh, for, uh, all of us to learn, uh, important lessons. Um, at least, we have one more question, uh, I don't know if you already saw that, uh, asking, uh, to provide some example. Uh, on access to RSPs. About RSPs holding accounts. And uh uh risk measures. Uh, to be placed, the remittance service providers, there are, of course, two categories, right? So there are, uh, institutions like, uh, Western Union, MoneyGrams. Uh, they are in the business of, uh, they, they are typically classified as money transfer operators, and they are almost equivalent to a Visa or a Mastercard. So they're operating a system. They're bringing in participants into the system, and the participants, in the case of Western Union, could be banks, could be other small exchange houses. Um, who then act as their channels, um, as their members to distribute, uh, to collect, uh, originate the remittances and distribute the remittances, uh, so in this case, um, for such an institution they don't want to issue accounts to individuals. What they want is access to payment infrastructure. Um, by access to their infrastructure we are referring to access to, uh, say, an RPGS for their, um, uh, for their, um, uh, faster settlement on the foreign exchange side, uh, or access to, uh, fast payment systems in, in the originating country and the receiving country, uh, to be able to distribute and originate remittance faster. So I, I, I myself, um. Um, uh, I'm a good user of the remittance services, uh, in the United States, and I, it always amazes me that I can, um, uh, uh, in a country like the United States with all the internet banking and all the digital payment options if I have to send money using from my account. Uh, it'll take 3 days for the clearing process to work, uh, and then after that, of course, it could be instantaneous, and because of that I have to use my debit card to originate the transaction, uh, and typically that comes with a higher fee than from a bank account. Uh, so if there was a fast payment system in the United States, um, uh, and then it would have been, um, on the origination side also it would have been fast, and the receiving side also, it would have been fast. So I think that is the, uh, the most important one. There are some cases where the remittance service providers are only originating the remittance or only distributing the remittance. And they might if given the um opportunity to open new money accounts they might uh be able to distribute the remittances into an account and that's an angle which should be also explored and I think um the examples, um, I think, um, some countries we have, we are seeing like, um, um, uh, kind of, um, uh, microfinance institutions, uh, there are also some cases of small banks, post offices, they actually start issuing some kind of, um, prepaid card or a mobile money account. I, I hope I answered the question. Uh, I see a question from, um, Isaku on what rural banks, cooperatives, and NFI should do. They may not be on a digital platform and rely on cash heavily and any suggestions to the regulators, and this is an area, I think, which, um, has not really captured the attention. And thank you, um, Isaku, for bringing this up. And I can also see why it could be very important in Philippines. Uh, the strong, um, uh, kind of the big tiered network, uh, tiered hierarchy of banks, um, in Philippines, and I'm assuming also in many, many other Southeast Asian countries. So typically a microfinance institution, rural banks, they are not direct participants in payment systems, so they are participating through an intermediate bank, um, and so because of that their operational reliability becomes even more impacted because they're reliant on the business community planning of the, of the, um, banking institution from whom they are accessing the payment system. And if that institution is not, um, uh, is not able to offer, uh, continued availability of the services, then they might be impacted. They're also largely interacting with their customers in cash. They do not offer many additional payment services, so I think, uh, the customers of 5 might be significantly impacted, um, uh, and this is an area which needs attention. Um, there are, uh, approaches by which, um, I think one can onboard the microfinance institutions onto some kind of a shared platform, uh, for them to do, um, uh, offer digital payment services to their customers from the shared platform, uh, but, uh, it's not very clear whether these things can be done in a very quick manner. Maybe, uh, some limited services could be offered, but to allow them to offer the full range of services. Uh, in a very quick time using the chat platform might not be feasible, but there could be some services which could be offered. OK, uh, thank you very much, Harish. So let us then close here, uh, a couple of, uh, uh, uh, points, uh, as I mentioned, we will share the presentation, uh, the presentations. Uh, we will also send, uh, um, a link to an evaluation, uh, form, so please, uh, um, uh, complete the form kindly so we can have, uh, your feedback. And, uh, um, so I want to announce that we will have uh uh some more of these webinars, uh, again on the, around the different aspects of, uh, uh, um, payment systems and, uh, uh, during this, uh, the, the crisis and COVID-19 and so on. Uh, so please, uh, uh, stay tuned and uh you may uh receive uh Um, uh, more, more invitations and we hope you, uh, found this, uh, interesting and, uh, are interested in joining again and if there are suggestions on, on topics that you think might be, um, uh, interesting, uh, uh, do let us know and, uh, if possible, we will address, uh, see Harish is sharing some links also to the, uh, to the materials and the reports he, uh, mentioned and we will, uh, also circulate them via email. Uh, later, and with this, uh, let me, uh, thank, uh, once again Harish and Akima for their presentations. Uh, uh, let me thank, uh, also all the colleagues from the, um, uh, Knowledge hub in Kuala Lumpur in Malaysia, Wei and, uh, and Lusita and everyone. Thank you very much for, for organizing this and for your, uh, for your support during the, uh. Um, webinar, which has been, uh, silent but very precious, so thank you very much. Uh, and, uh, and of course, thank you to, uh, all of you for joining and uh please uh stay in touch and we hope to see you again soon. Thank you, Marco. Thank you. Bye-bye. You, yeah, thank you, everyone. Have a nice day.

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