Phil Mnisi: Statement - official opening ceremony of the COMESA
Symposium
Statement by Mr Phil Mnisi, Governor of the Central Bank of Eswatini and Chairman of
the COMESA Committee of Governors of Central Banks, at the official opening
ceremony of the COMESA Symposium, Ezulwini, 7 November 2024.
* * *
Hon. Minister of Finance
Hon. Chileshe Mpundu Kapwepwe, Secretary General of COMESA
Distinguished Governors
Distinguished Delegates
Ladies and Gentlemen, Good morning!
Let me begin by welcoming you, Distinguished Governors and your delegations to the
Kingdom of Eswatini. I hope that you are enjoying our hospitality and that you will find
time to explore our stunning natural beauty and landscape, that our country has to offer.
Your presence here is not just an honor but reveals your commitment to the COMESA
Monetary Integration Agenda.
It is both a privilege and a profound responsibility to address you today during the 2024
Symposium of the COMESA Committee of Governors of Central Banks on the following
two themes, namely:
"Digital Banking and the Impact of Cyber Security and other Emerging Risks to
Central Banks in the COMESA Region", and
"The Era of using Big Data and Machine learning in Central Banks and Financial
Institutions: Implications for Monetary Policy".
Regarding the first theme of "Digital Banking and the Impact of Cyber Security and
other Emerging Risks to Central Banks in the COMESA Region", let me acknowledge
that the banking sector in the COMESA region has witnessed tremendous
transformation in recent times. Digital banking has not only expanded access to
financial services but has also streamlined operations and enhanced customer
experience. It holds transformative potential for financial inclusion, efficiency, and
economic growth not only for our region but also for the entire world.
However, these opportunities come with significant challenges, particularly in the
realms of cybersecurity and other emerging risks. Cybersecurity has emerged as one of
the most pressing concerns for central banks and financial institutions globally and,
indeed, in our own region. As financial services increasingly move online, so does the
risk of cyberattacks.
Malicious actors exploit vulnerabilities in digital infrastructures, posing a significant
threat to individual financial institutions and the entire financial system. For instance, a
successful cyberattack on a single institution can trigger a domino effect, leading to
systemic risks and potentially destabilizing the entire financial ecosystem. As such,
even as we embrace digital banking owing to its benefits, we also become more
vulnerable to cyberattacks, data breaches, and other malicious activities.
The risks are not just limited to disruptions in monetary policy implementation and
financial losses; they can erode the trust of citizens in the banking sector and threaten
the stability of an entire financial system.
Moreover, as we embrace digital innovations, we must remain vigilant about other
emerging risks, including:
Technological Vulnerabilities: As banks adopt modern technologies, the potential
for system vulnerabilities increases. This necessitates robust risk management
frameworks.
Regulatory Compliance: As digital banking evolves, so must central banks'
regulatory frameworks. Central banks must ensure that regulations are adaptive
and can respond swiftly to new threats.
Consumer Protection: As we digitize banking services, protecting consumers from
fraud, and ensuring their privacy becomes paramount. Central banks need to
establish clear guidelines and frameworks to protect consumers in this digital age.
Potential income inequality: As we embrace technological advances, there is
potential for increased economic inequality as certain demographics may be left
behind in the digital shift. Central banks in the region need to continue taking
proactive measures to ensure that digital banking serves as a bridge rather than a
barrier to financial inclusion.
Honorable Minister
Honorable Secretary General
Distinguished Governors
Distinguished Delegates
The recent surge in cyber incidents globally has underscored the urgency for central
banks and financial institutions to adopt robust cyber security measures. Such
measures could include, among others, the following:
Strengthening Cyber Security Protocols: Central banks and financial institutions
need to develop and continually update cyber security strategies, employing the
latest technologies and practices to safeguard sensitive data.
Collaboration and Information Sharing: In our respective countries, there is need
to continue fostering collaboration between the central bank, financial institutions
and government agencies. Sharing intelligence on threats and vulnerabilities can
significantly enhance an individual country's collective security posture. Similar
efforts at the regional and international level should also be encouraged.
Capacity Building and Training: Continue investing in human capital by equipping
our staff with the necessary skills and knowledge to identify and respond to cyber
threats effectively.
Regulatory Frameworks: Continuously improve the regulatory frameworks that not
only promote innovation but also ensure the safety and soundness of individual
country's financial systems.
Public Awareness Campaigns: There is a need to continuously educate the public
on the importance of cyber security and safe banking practices. Informed citizenry
is the first line of defense against cyber threats.
Honorable Minister
Honorable Secretary General
Distinguished Governors
Distinguished Delegates
Turning to the second theme on "The Era of Using Big Data and Machine Learning in
Central Banks and Financial Institutions: Implications for Monetary Policy", it is worth
noting that the rapid advancements in technology have opened a wealth of possibilities
for how w e gather, analyze, and utilize data. These technologies are revolutionizing the
way we analyze economic data and formulate monetary policy.
Central banks and financial institutions are increasingly relying on big data analytics to
gain insights into consumer behavior, economic trends, and market dynamics. Some of
the potential benefits and monetary policy implications of Big Data and Machine
Learning for central banks include, among others, the following:
Enhanced Forecasting: By harnessing data from diverse sources
- such as social media, transaction data, and global economic
indicators - central banks can improve economic forecasting
capabilities. Machine learning algorithms can identify non-linear
relationships and adapt to changing conditions in real-time,
allowing central banks to make more informed policy decisions.
The ability to analyze large datasets allows for more accurate
economic forecasts, which are essential for effective monetary
policy formulation.
Informed Decision-Making: Machine learning can help us
process the vast economic data that our countries generate
through real-time data analysis. This will lead to more informed
decision-making, ensuring that our policies are evidence-based
and aligned with the needs of our populations.
Risk Assessment and Management: The financial sector is
inherently risky. By utilizing big data, central banks can enhance
their risk assessment frameworks. Machine learning models can
analyze significant amounts of data to identify potential
vulnerabilities in the financial sector, enabling central banks to
act proactively rather than reactively.
Monetary Policy Transmission: Understanding how monetary
policy affects various sectors of the economy is crucial. Big data
analytics can allow central banks to measure the impact of
policies more accurately and understand the channels through
which they operate. This can allow central banks to tailor policy
interventions more accurately to the desired outcomes.
Financial Inclusion: One of the goals for most central banks in
the COMESA region is to enhance financial inclusion. Big data
can help us identify underserved populations and structure
financial products to meet their needs, thus promoting equitable
economic growth.
Honorable Minister
Honorable Secretary General
Distinguished Governors
Distinguished Delegates
Let me now turn to the key challenges and considerations by noting that as
policymakers, we must ensure that our use of big data is guided by ethical
considerations and robust governance frameworks. The integrity of our financial
systems depends on our ability to maintain public trust. Some of the challenges and
considerations that accompany the integration of big data and machine learning,
include the following, among others:
Data Privacy and Security: As we collect and analyze more data, we must
prioritize the privacy and security of individuals and institutions. Establishing
robust frameworks for data governance is essential to maintain trust in our
financial systems.
Capacity Building: The successful implementation of these technologies requires
skilled personnel and infrastructure. Investing in capacity building for our central
banks and financial institutions is crucial to harnessing the full potential of big data
and machine learning.
Equity in Access: We must ensure equitable access to these technologies and
that no segments of the society are left behind.
Conclusion
In conclusion, as we embrace digital banking and the integration of big data and
machine learning into our financial systems, central banks and financial institutions
must also remain vigilant about the risks these innovations entail. Central banks in the
COMESA region need to ensure that financial institutions in their jurisdictions are
resilient, secure, and capable of navigating the complexities of the modern financial
landscape.
In addition, big data and machine learning holds immense promise for central banks
and financial institutions in the region. By leveraging these technologies, central banks
in the region can enhance their monetary policy frameworks, promote financial stability,
and drive sustainable economic growth in our various jurisdictions. Let us embrace this
opportunity to innovate and transform financial systems for the betterment of our
individual economies and the well-being of our citizens.
Thank you for your attention and God Bless !