Dr Atiur Rahman, former governor of the Bangladesh Bank (BB), on Wednesday said domestic and cross-border financial interoperability would help to give much-needed impetus to the economy by easing financial transactions.
Hailing the government's move to make the existing financial services interoperable, he said the country developed adequate infrastructure over the years for domestic interoperability.
"But now we need to focus on cross-country interoperability. In absence of a digital payment system, we cannot make payments to our neighbouring countries," he said while speaking as the chief guest at the opening session of a training programme.
Policy Research Institute (PRI) and the Economic Reporters' Forum (ERF) jointly hosted the event - 'Financial Interoperability in Bangladesh: Challenges and Way Forward'.
Citing the example of currency swap deal, under which the BB lent US$ 200 million to Sri Lanka, Mr. Rahman said another cross-border interoperable payment system needs to be developed.
The system would not only give a huge boost to cross-border trading, remittance and freelancing, but also raise foreign exchange inflow in a substantial way.
For maximising the benefits of financial inclusion, the former BB governor suggested making MFS (mobile financial service), PSP (payment service provider), PSO (payment system operator), NBFI (non-bank financial institution) and bank interoperable as quickly as possible.
He noted that financial interoperability is necessary to adapt with the evolving changes, and measures should be taken in such a way that common people can make transactions in small shops through scanning QR codes.
"There is also a demand for this. But the government will have to develop necessary infrastructures in this regard, which also requires investment. The Indian government has invested a lot for introducing such system. Bangladesh also needs to do the same."
Dr. Atiur opined that if private companies make the investment instead of the government, they would charge clients against their will.
"It will create doubt about sustainability of the system. For this, there is a need to make proper allocations in the budget."
The former BB governor also said stimulus can be of two types. One is to give cash, and the other is to devise a simple mechanism - so that people can be included in the new system for their convenience.
"I think simplification of rules and regulations is the biggest incentive rather than fund," he added.
As a special guest, BB Executive Director Debdulal Roy said whatever transaction and exchange of information is taking place in the country's financial sector is not interoperability, rather it is interconnection.
"Now, the time has come for going towards interoperability. It will make transactions multidimensional, and thus will boost strength of the economy."
The BB launched interoperability among the MFS companies in October 2020, but it was halted within hours of launching. Since then, the service has not been restored, he mentioned.
PRI Research Director Dr M A Razzaque said financial transactions in the country would be simple, competitive and innovative - once financial interoperability is introduced.
"The more the innovative capacity of a country is, the higher its economic growth will be," he added.
Prof Bazlul H Khondker opined that digital financial services have made a positive impact on poverty alleviation and personal savings.
ERF Vice President and AFP Bureau Chief Shafiqul Alam presided over the training programme, while ERF General Secretary S M Rashidul Islam gave the welcome address.
