FinTech Policy Forum,
Organized by AFI in collaboration with Central Bank of Jordan (CBJ)
Monday, 2 April, 2018
Amman, Jordan

Opening Remarks by HE Dr. Ziad Fariz, Governor of Central Bank of Jordan (CBJ)

Excellencies, AFI members and participants, Distinguished guests, our beloved national Fintech innovators, my colleagues, Ladies and Gentlemen,

Good morning to all of you on this lovely spring day.

First, let me warmly welcome everyone here to the Hashemite Kingdom of Jordan, especially those who traveled a long way to be here with us, and to congratulate AFI for their 10th anniversary of hard and dedicated work in promoting financial inclusion and bringing smart policies to life.

Today we have more than 100 central bankers and policy makers gathering from the whole world in a unique event of its kind addressing Fintech from regulators’ perspective.

In my remarks this morning, I would like to share my perspective on where financial innovation is today, the potential I see for Fintech to improve the lives of ordinary Jordanians and improve businesses’ bottom lines, and what the Central Bank of Jordan is doing to encourage responsible innovation within the financial system.

Where financial innovation is today and what are the challenges
Technological advancements are redefining finance and reshaping the financial landscape. We are only beginning to understand how new technologies could transform payments, lending, remittances, trade finance and correspondent banking.

While we see the risks associated with Crypto assets, the underlying technology (blockchain) provides significant opportunity to enhance efficiency and security not only in the financial sector but also in other sectors. Also Big data analytics, artificial intelligence and machine learning continue to unveil unconventional ways to assess customers, and to access unserved markets. I trust we are all gathering here today in a Fintech policy forum because we all face similar challenges and share common interests in being well prepared, focused, and equipped to benefit from the advancement in Fintech to expand and improve the way financial services are delivered.

This leads to many valid questions to which I hope you will be finding answers and submitting recommendations on to the G20 in their upcoming meeting next month. How Fintech might disturb the banking sector and how that might impact financial stability? What would be the appropriate response from us as regulators?

How are we going to protect the financial stability and balance among the policy objectives of Inclusion, Protection; integrity and stability? Would the Digital lending platforms, with their innovative approaches, and their innovated loan products replace the banks’ and micro finance lending’s services? Are we going to issue our own digital currencies? And most of all, does Fintech present different risks and concerns than those raised by conventional financial institutions? And, does the current financial regulation adequately address these risks and concerns?

CBJ Approach to Fintech
We at CBJ are working across a range of issues that we believe will be important to inform our thinking on digital developments, both in the financial sector and the broader economy, and in collaboration with the Fintech industry to cope up with the speedy developments in the market. In my view, financial regulators have an important role in fintech development. As regulators, I believe our principal responsibility is to ensure that supervised institutions are operated safely and soundly and comply with applicable laws, including treating consumers fairly. Within that framework, however, we also have a strong interest in permitting socially beneficial innovations to flourish, and also in ensuring that the risks are appropriately managed. In this vein, we are developing ways to appropriately adapt regulatory and supervisory structures relative to changing technologies and business models. Our approach to Fintech has been characterized by opened minds and open door policy.

Opened minds
We judge that crypto-assets themselves may have limited utility, particularly as money. They are too volatile to be a store of value, and some of them pose risk to the integrity of the financial system. However, we also recognize the opportunities in the technologies that underpin cryptoassets. The distributed ledger and cryptographic technologies used by crypto-assets have the future potential to deliver benefits both to the financial system and to the economy they serve, including increasing efficiency and resilience and contribution to a more distributed and diverse payments system. Hence, we recently approved the request from the licensed credit bureau in Jordan to provide a new service based on blockchain technology for identity verification.

We are also in continuous discussion with industry leaders, innovators, and we devote significant time to discuss new ideas and innovations including in cryptoassets.

We finalized our regulatory Sandbox which will be published today for feedback and consultation.
In parallel, and to test our capabilities in dealing with innovators, and to build a self- learning process gained from a modest journey with fintech innovators, we accepted two cohorts with innovative ideas in our virtual Sandbox, and ushered them through professional guidance, advisory services; bridging them with the incumbents, and testing with the banks and payment service providers. We expect to move forward with them into the experimentation phase in the coming couple of months; hopefully, they will successfully graduate from our sandbox by the 3rd quarter of 2018.

We will be officially opening the first submission window for eligible cohorts once our regulatory Sandbox is finalized and the feedback is reflected wherever we deem appropriate. Expected time is the third quarter 2018.

I will leave you now with these thoughts, challenging questions and topics. Hopefully you will succeed in finding smart answers and solutions for them. Finally, Thank you once again for coming and Wishing you a pleasant and fruitful stay and successful meetings and valuable workshops in the coming four days.