With licenses issued to digital banks and digital payments adoption on the rise, the Bangko Sentral ng Pilipinas (BSP) sees that digitalization has the potential to ease the country’s inflation in the long run.
According to BSP, digitalization has the potential to reduce the costs of production and distribution for businesses. This then translates to convenience in terms of payments and transactions on the part of consumers.
Philippine inflation eased to 3.6% in December. It was at 2%-4% for the whole year of 2021.
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“Digitalization is one of the huge changes that will have an effect in lowering inflation in the long run,” said BSP Governor Benjamin Diokno.
The share of digital payments to total financial transactions reached 20.1% in 2020 from 14% in 2019 and only 1% in 2013. The COVID-19 pandemic, with restrictions in mobility and varying government-imposed lockdowns, accelerated digital transformation across all sectors prompting consumers to readily adapt to the new way of doing transactions
The central bank’s “Digital Payments Transformation Roadmap 2020-2023” underscores the need to focus on digitalizing payment streams, enhancing key infrastructure to create a more inclusive digital payments ecosystem, and promoting digital innovations through a digital governance framework.
Digitalization has made it easier for consumers to be more educated with their purchases with information about products and services readily available.
The BSP said “these forces encourage competition among enterprises to capture or maintain market share, which in turn helps keep consumer prices low and stable.”
Under its Digital Payments Transformation Roadmap (DPTR) 2020-2023, the BSP pursues the twin goals of converting at least 505 of all retail transactions into digital, and onboarding at least 70% of the population to the formal financial system by 2023.
“I am very confident, because we are ramping up the use of digital payments, that by the end of my term, we will reach the 50% target,” the Governor said.