THE wider adoption of digitalization, particularly of banks’ financial services, may help bring down the overall growth of consumer prices in the country, the Bangko Sentral ng Pilipinas (BSP) said.
In a speaking engagement, BSP Governor Benjamin E. Diokno said aside from monetary and fiscal policies, technological advancements can help keep prices low and stable over the long-term.
In particular, making payments and transactions more convenient through digitalization reduces the costs of production and distribution for businesses in the country.
“Digitalization is one of the huge changes that will have an effect in lowering inflation in the long run,” Diokno said.
The governor also said digitalization will make it easier for consumers to gather information on products and services and make informed purchases.
“These forces encourage competition among enterprises to capture or maintain market share, which in turn helps keep consumer prices low and stable,” the central bank governor said.
Under its Digital Payments Transformation Roadmap (DPTR) 2020-2023, the BSP pursues the twin goals of converting at least 50 percent of all retail transactions into digital and of assimilating at least 70 percent of the population into the formal financial system by 2023.
The share of digital payments to total financial transactions reached 20.1 percent in 2020 from 14 percent in 2019 and only 1 percent in 2013.
“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-percent target,” the Governor said.
Earlier this month, Diokno warned of a potential “temporary” uptick due to the recent typhoon that ravaged the Visayas.
In particular, the governor said supply disruptions and agricultural damages from typhoon Odette will likely result in a “temporary uptick in the prices of food items and other necessities over the near term.”
“As with previous episodes of natural disasters, the effective implementation of non-monetary government intervention measures to ensure adequate domestic food supply must be sustained in order to mitigate potential supply-side pressures on inflation,” the governor earlier said.
Diokno said the BSP will incorporate the typhoon’s impact into its projections once firm estimates become available.