Digitalization was seen to ease inflation in the Philippines “in the long run”, according to BSP.
BSP — On Tuesday, the Bangko Sentral ng Pilipinas said that digitalization was seen to ease inflation in the country “in the long run”.
The central bank said that the wider adoption of digital payments in the Philippines was seen to reduce costs of production and distribution for businesses.
In turn, the central bank said in a statement that digitalization was expected to have a positive impact on inflationary trends.
ABS-CBN News reported that inflation in the Philippines hovered above the target of 2% to 4% for almost the entire 2021 before easing to 3.6% in December.
BSP Governor Benjamin Diokno said that digitalization was one of the huge changes that will have an effect in lowering the inflation in the country “in the long run”.
According to Diokno, technological advancements can help keep prices low and stable “over the long-term”.
For example, digital banks have cheaper and faster onboarding processes because they didn’t spend on overhead costs of tellers and the building and maintenance of physical branches, the BSP said.
Recently, the central bank launched a standardized QR code system, making online fund transfers for different banks more efficient and easier.
Also, economic managers have said that digital payments can eliminate corruption and hasten cash aid distribution.
The central bank had been actively pushing for technological advancements under its “Digital Payments Transformation Roadmap 2020 to 2023” with the goal of digitizing 50% of payment and onboarding 70% of the population in the country to the formal financial system by 2023.
BSP data showed that the share of digital payments to the total financial transactions reached 20.1% as of 2020 (from 14% in 2019 and only 1% in 2013).
With the accelerated adoption of digital payments in the country during the pandemic, the BSP chief said that he’s “confident” in meeting the target ahead of time.