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Regulators, executives united in pushing for digital ID programs

Regulators, executives united in pushing for digital ID programs

There is a telling moment during one of this year’s Digital Monetary Institute panel discussions. The host of the digitalization symposium pauses the discussion to read the results of an audience poll about digital identity and the world economy.

The question was, “Are digital IDs the key to unlocking the potential of data to transform business in the economy?” Everyone responding said yes.

All six deeply experienced government and business panelists in their small Zoom boxes smiled broadly.

They looked like one might imagine Facebook executives felt when their Meta rebranding got its first appreciative review. Not surprised – they had long ago drunk the Kool-Aid. But they definitely looked happy that they were no longer the few who had.

Of course, the poll was not querying a random group. Respondents were serious financial and digital identity wonks. And yet, not only was this singlemindedness not always the case, but it is also a small step toward a day when something like a random poll yields a similar consensus.

Deep and broad digitalization of the global economy with all the expected efficiencies cannot happen — particularly in the finance and government sectors – without reliable, transferrable digital identification.

The DMI symposium, held earlier in May, was held by the London-based Official Monetary and Financial Institutions Forum.

The speakers were Kay Turner, chief digital ID advisor to the U.S. Treasury Department’s Financial Crimes Enforcement Network; Valentina Ion, Microsoft’s director of government industry solutions; Molly Mahar, senior associate director in the Federal Reserve Board’s supervision and regulation division.

Also opining were Edward Bowles, global director of public policy at Meta Financial Technologies (formerly Facebook’s Novi) and Doug Arner, the University of Hong Kong’s Kerry Holdings law professor.

They touched on a number of themes, including fragmentation of governance for the regulation of data, financial inclusion and digital identification.

Asked how he saw the world right now, Meta’s Bowles spoke as someone working for a global information firm.

“Right now,” he said, “I see incredible divergence and a high degree of protectionism by quite a lot of countries around the world. They dress up data protection as a means of trying to preserve onshoring data.”

Microsoft’s Ion says there is a different kind of fragmentation, one that also is needlessly slowing digitalization.

“There’s a lot of talk about the trade off between privacy, security and even value creation,” she said. “But they can be achieved simultaneously through confidential computing, AI and cryptographic algorithms and protocols powered by quantum computing.”

On the way to mastering that, according to Ion, there needs to be industry standardization and common data models.

Turning to digital ID, the panel felt emboldened enough in growing acceptance that some members threw some cold water on unrealistic expectations.

Turner, with the Treasury Department, said there will always be some transactions better suited for in-person proofing – such as mobile driving license applications. Deepfakes, after all, are only getting better.

“Digital identity is tough, right? Anywhere along the chain you call into the question the integrity of an identity,” she said. And to be even close to universally accepted, all the data security steps still have to leave digital IDs “dynamic,” the way often-updated mobile driving licenses will be.

Hong Kong University’s Doug Arner said there is a “transformation package” for digital ID’s future to be had.

The first piece is digital access for citizens. Second, development of a sovereign biometric ID system would be “incredibly powerful.” Next is access to a bank account or digital wallet, and connected to all of it are international payment systems.

For now, it is going to have to be enough that a financial technology symposium audience agrees that digital ID programs are the keystone to efficient world trade and commerce.

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