MUMBAI: The increasing digitalisation of investments and credit is creating new challenges for monetary authorities, RBI deputy governor Michael Patra said.
“The shift from traditional modes of savings can affect the transmission of monetary policy impulses to the real economy. Second, central banks need to be vigilant about the possibilities of debt escalation and risk build-up at the household level,” he said, while addressing a Maldives Monetary Authority conference. “The proliferation of digital consumption has been accompanied by a shift in saving and investment decisions such as online brokerage accounts, robo-advisers, investment apps and the like, as they are easier, faster and more informed,” the deputy governor said.
He added that digitalisation has also influenced borrowing patterns of households, with greater and easier access to fintech companies for digital loans, and by reducing information asymmetries through a wide range of sources, including tax returns, electronic toll collection, and bill payments. “The rapid progress in information and communication technology is contributing significantly to shortening the ‘space-time flow’ of circulation of capital – allowing it to move faster and grow larger,” Patra said.