Varieties of Digital Financial Services

Digital financial services or DFS are closely linked to the evolution of the financial inclusion agenda in the global South, but the same technologies are used in the global North as part of initiatives to reduce the usage of cash. What are the similarities and differences in how these technologies are deployed and engaged with? To consider this, our paper outlines how the policy rationale for advancing digital financial services or DFS vary across different countries and contexts. These are centred on three discourses. One, that DFS enhances financial development and thus leads to more growth and less poverty. Two, that DFS can enhance financial stability by improving the transmission mechanisms of monetary policy. And three, that DFS can help over undesirable transactions, such as those related to illicit activities and tax avoidance. These are influential discourses and underpin the rapid dispersion of DFS policies, backed by new regulations and financial infrastructure, but there is considerable variation across countries for which discourses are prioritised over others. We show how this variation is reflective of differences in where countries are positioned in the global financial system, of which an international hierarchy of currencies is a defining feature. For this we present a set of mini case studies using examples from South Asia, Latin America, and Europe. We draw textual and quantitative resources from the Bank for International Settlements, central banks, and global institutions that directly shape our engagements with DFS.