January 26, 2018
While central bankers are often seen as somewhat traditionalist, South Africa’s Reserve Bank Governor Lesetja Kganyago is breaking that mold. Kganyago sees how new technology—or fintech—is transforming the financial sector, and in this podcast, he says there is no turning back.
“Banks will never be the same,” says Kganyago. “They need to embrace fintech or they will disappear.”
South Africa’s bank governor since 2014, Kganyago was recently appointed chair of the influential International Monetary and Financial Committee (IMFC). And as the first committee chair from sub-Saharan Africa, many expect he will focus on the challenges facing emerging market and low-income countries.
Kganyago says that with all the opportunities that financial technology offers comes added responsibility to ensure the integrity of the financial system.
“It’s a contract the central bank has with society,” says Kganyago. “It’s based on trust. We will insert ourselves in your pockets, in your wallets, and we need to make sure we never betray that trust.”
Kganyago says when people have trust in the physical bank notes, there is no reason why a central bank couldn’t start thinking about issuing a digital currency.
Another area where Kganyago says technology is having an impact is in fighting corruption.
$1.5 to $2 trillion dollars each year is lost to bribery alone, and central banks are well positioned to spot illicit flows.
“We now see the flow of money in real time, and the institution has a duty to report suspicious transactions,” says Kganyago.
The central bank governor joined a panel discussion on what fintech means for central banking during the 2017 IMF World-Bank Annual Meetings in Washington.
Listen to the podcast: