17+1 High-Level Fintech Forum Welcome Speech
Welcome speech by Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, at the 17+1 High-Level Fintech Forum.
Dear Deputy Governor Zhu Hexin, Governors, Ministers, Distinguished Guests,
Welcome to the very first 17+1 High-Level Fintech Forum.
This Forum marks the beginning of a new chapter for the 17+1 format. We are officially opening a new track for cooperation between China and Central and Eastern Europe – a track on fintech.
As part of this dedicated forum, we will also establish the Digital 17+1 Fintech Coordination Centre. This Centre will provide a platform for the participating countries to have continuous dialogue in the area of financial technologies, thus making full use of our partnership potential.
I am honoured that all of this is happening here, in Vilnius – an emerging cluster of financial innovation.
My short intervention today will focus on three key building blocks. First, the potential contribution of fintech to global economic development and international trade. Second, the importance of not only benefits, but also risk management. And finally, the role of financial technologies in strengthening economic ties between China and our region.
Ladies and Gentlemen,
Let me begin with the issue of fintech, economic growth and trade – the focus of our first session. Today, the world economy is under stress due to global trade tensions. International trade is stumbling, and supply chains are feeling the squeeze. The IMF now projects a mere 1.1% world trade growth for 2019. This is a sharp decline from 2017, when trade was growing 5 times faster.
In this context, we need to think outside the box. I believe that fintech can improve the speed and efficiency of the way companies pay international suppliers, fund foreign operations, or repatriate profits – making cross-border business easier.
In this regard, we already have good and practical examples to turn to. For some time now, Hong Kong and Singapore have been engaged in a joint innovation project, led by the respective central banks, called the Global Trade Connectivity Network. This project links trade finance platforms of both territories using blockchain technology. Setting up a digital corridor helps to deal with the inefficiency of the paper-based trade finance system.
Such solutions can go a long way to facilitate global commerce and bring greater economic prosperity. However, as in this example, they require close international cooperation – something that we are developing in this event.
My second point deals with managing the risks of financial technologies – from money-laundering concerns to cyber-security, data protection, and potential financial stability implications.
At the Bank of Lithuania, we have worked hard to advance fintech growth – while always keeping a close eye on the potential risks. We had to change our regulatory mindset – today, we are operating not merely as a watchdog, but also as a partner of the financial sector. Such an attitude is necessary for gaining a deeper understanding of innovative business models. You cannot trail behind market developments if you want to address the associated risks in a timely manner.
Let me give you some examples of how this works in practice. We are operating a Newcomer Programme – an increasingly popular, one-stop-shop for consultations on all issues that prospective market entrants may have. We also run a regulatory sandbox – a controlled regulatory environment for testing innovative financial products before they reach the market.
Such interaction with potential or new market participants is, indeed, a two-way street. It not only helps fintechs navigate our regulations – it also allows us to identify risks at an early stage and take action immediately.
The Bank of Lithuania pays particular attention to AML risks. For instance, we have substantially boosted human resources devoted to the issue, and enhanced inter-institutional cooperation in this field.
Additionally, we have taken a step further by engaging the private sector and building a wide-ranging AML alliance. More specifically, in a joint effort with other public authorities, we have proposed an initiative to establish a national public-private AML competence centre. This centre would provide a platform for strategic and tactical coordination on AML-related issues.
Given the cross-border nature of fintech, I believe that formats like the 17+1 can play a crucial role in enhancing the existing international cooperation set-up on managing the associated risks.
My third and final message concerns economic ties between the 17+1 participants.
I mentioned that fintech can help accelerate global commerce. I believe it can also do precisely that for trade between China and Europe, and CEE countries in particular. Let me give you an example how.
At the Bank of Lithuania, we operate a payment system called CENTROLink. The system allows one to reach 34 Single Euro Payments Area (SEPA) countries with ease. Crucially, we have opened the system up to fintech entities directly. This, together with other fintech-oriented regulatory steps, has permitted us to position Lithuania as a gateway for third-country fintechs to enter Europe’s payments and banking markets.
Several fintechs from China have already used this gateway, and more have expressed interest in doing so.
New fintech entities with an EU licence can help eliminate existing bottlenecks in the financial sector infrastructure – for instance, by making cross-border retail payments between the EU and China faster, cheaper, and more efficient. This will make it easier for businesses across Europe to reach the booming Chinese consumer class – and, indeed, for Chinese firms to trade more in Europe.
We have all the necessary elements for fruitful cooperation on fintech. The 17+1 framework, which constitutes a platform for building trust across borders. Policy-makers keen to advance the fintech agenda forward. Countries full of opportunity and unlocked potential. And – a vibrant host-country to serve as a launching pad for new projects and ideas. Thank you.