felipe m medalla : within reach - how digitalization boosts financial inclusion in the philippines speech by mr felipe m medalla, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the asean high - level seminar on innovative strategy to further enhance financial inclusion, bali, 27 march 2023. * * * to guests, financial inclusion champions, ladies, and gentlemen, selamat siang. the first thing i would like to do is thank [ bank indonesia ] governor perry [ warjiyo ], our indonesian host, for hosting such a wonderful event. on behalf of the philippines'central bank, thank you for inviting me to share the philippine experience in digital technologies to reinforce financial inclusion - a topic very important to us at the central bank, especially the monetary board. in a sense, we are a very traditional central bank that is very concerned about [ our three pillars of ] price stability - of course, right now, it is always putting us in the headlines because we are missing the [ inflation ] targets ; financial stability ; and, of course, a safe and efficient payments system. but with all of these strong three pillars, it will be a pity if it is not inclusive. so, the bangko sentral ng pilipinas ( bsp ) has made financial inclusion a very important part of its strategic objectives for the next so many years. expanding the mantle of financial inclusion through digital tools as you might have already heard, our target is to increase the proportion of people who are included in the financial system - that is, they have a formal bank account or electronic wallet - to 70 percent this year. the other way to put it is, we want to reduce the number of [ financially ] excluded people to below 30 percent [ at the asean level ]. by the way, it [ the financial exclusion level in the philippines ] was 71 percent in 2019. the 2021 number is now at 44 percent. we are certain that the 2023 numbers are much lower, and we are on our way toward 30 percent or lower. we are actively working to bring the figure down, and covid sped up the process [ of harnessing digitalization to expand financial inclusion ] - but, i think, there is no stopping us. of course, there are limits because of the infrastructure itself. a big part of the population has no access to even a cellphone signal in some cases. so, we have to find other

to say how and over what period. i am planning to take up some factors here in the risk scenario that must be taken into consideration in the ongoing evaluation of monetary policy. one issue concerns the extent to which we, inter alia as a consequence of the development of information technology, will see a higher productivity growth than we had expected and which, all other things being equal, would create scope for higher demand without threatening the inflation target. another way of putting this question is whether we can expect to be on our way into something that is called “ the new economy ” in debate. another issue which i have discussed in more detail in earlier speeches is that there is reason to fear that wage formation will not be able to cope with limitations set by the inflation target and productivity growth. how great, for instance, is the risk for the old pattern of wage spirals and increasing inflation being repeated? in this case, the riksbank may be obliged to carry out a more stringent monetary policy to counteract growing inflationary pressure by subdued demand. my ambition is not to give any answers but rather to point out what we have to take notice of in future. productivity development an important component of the analytical framework of monetary policy is accordingly to make forecasts of potential growth. the supply of labour and productivity growth are important determining factors for how much we can produce in the long term in our country. a higher potential rate of growth creates, as i said earlier, scope for greater demand without inflationary pressure arising. during the1950s and 1960s and until the beginning of the 1970s, the swedish economy was characterised by very strong growth and very high productivity growth. labour productivity grew from 1960 - 74 on average by as much as 4. 3 %. at the same time, inflation was low during these years. the gross investment ratio was high and a large part of sweden ’ s incomes were invested during this period in expanding the productive capacity of the economy. demand for goods could be satisfied at the same time, without the balance of payments showing large structural deficits. in the mid - 1970s, productivity growth declined and it has since then been considerably lower than during the good years earlier and from 1974 to 1994, the growth in labour productivity remained at an average of 1. 4 %. at the same time, the economy was characterised by high inflation. the low productivity growth was reflected by a drastic decline in the gross investment in relation to gdp in the mid - 1970s. a smaller part of the