The Reserve Bank of India (RBI) has released its Report on Currency and Finance for 2023-24, highlighting the potential risks and opportunities of digitalisation in the financial sector. This report is significant for it highlights an effect that digitalisation leads to the emergence of new interconnected risks, and forms a more perilous financial web.
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In this regard, the RBI acknowledges that shifts in consumers’ as well as financial intermediaries’ behaviour driven by digitalisation could matter for monetary policy. The use of technology in provision and delivery of financial services offers convenience to customers as well as efficiency in the delivery system but at the same time it causes impulse buying, herd behavior, and insecurity of customer’s data.
It also looks at how digitalisation has influenced inflation and output volatilities, and transmission of monetary policy. While, the RBI concedes that emerging with the new digital age bring significant opportunities for India to transform from a emerging market economy to an advanced economy.
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