Recently, at the World Economic Forum Annual Meeting in Davos, Switzerland, a new initiative called the Green Digital Fiance Alliance was announced. It was created in order to harness digital technologies in catalyzing financing that address global environmental challenges. It can increase the capabilities of factors throughout the financing value chain, at reduced costs, to factor in environmental risks, opportunities, and incentives. In addition, it enhances the effective use of policies, regulations, and fiscal measures. The Alliance’s potential to catalyse green finance has to date not been systematically explored or exploited, although its contribution to advancing financial inclusion is widely appreciated.
The use of technology in finance is of course not new, but a step change is now expected with the novel application of a number of technologies in combination. This novel application of a number of technologies in combination makes the current wave of disruption unlike any we have seen before in finance. It considers ways to unlock greater financial inclusion by reducing the costs for payments and providing better access to capital domestically and internationally. Also, it can mobilize domestic savings at a scale that will enable long-term investment directed at the long-term sustainability of the real economy. It disrupts the provision of financial protection, risk management, and risk diversification for vulnerable and exposed communities. Overall, it helps the ability to collect, analyze and distribute information on the financial system and the real economy for better economic decision-making.
The Alliance will develop a program of activities with three pillars that together address its core goal whilst meeting its members’ interests. First, it will undertake and communicate a stocktaking of green digital finance initiatives worldwide to identify, reward, and encourage the adoption of practice. Secondly, it will mobilize dialogue involving financial institutions, policymakers, and key stakeholders to encourage collaborative action in blending business and policy innovation. Finally, it will initiate specific activities testing out and scaling innovations in green digital finance involving members.
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