Despite soaring temperatures in Seville, participants at the recent 4th International Conference on Financing for Development (FFD4) were unable to escape the effects of a cooling global economy. Among those attending—including Heads of State, UN representatives, and the leaders of Multilateral Development Banks and International Financial Institutions—there was a real sense of urgency to identify the reforms and actions needed to reduce debt, increase fiscal space, improve development cooperation, and mobilize finance to catalyze growth on fairer and more effective terms.
Developing countries are now facing development and climate financing shortfalls estimated at $4 trillion annually. Public debt has also reached record levels: most countries in the Global South are experiencing or at high risk of debt distress; interest and service debt payments are eating up 20 percent of GDP in lower income countries and 12 percent in middle income/emerging markets. It’s estimated that more than 3.4 billion people now live in countries that spend more on interest payments than on health or education.
The sense of urgency was also a response to a fraught economic environment: declines in official development assistance, economic fragmentation and trade wars—which are disincentivizing foreign investment and disproportionately impacting developing economies, supply chains, and businesses.
Digital finance as an enabler of economic growth, resilience, and inclusion
Digital finance emerged as a potential solution to help countries navigate these economic headwinds; recognized as critically important to increasing domestic resources, financing development, and fostering impact at scale. Comprehensive, inclusive financial services—lending, payments, savings, and insurance—were also perceived as crucial enablers of economic resilience, participation, and growth. Digitalization, including tokenization and distributed ledger technology, many argue, could facilitate global transactions and financial cooperation, enhance financial inclusion, and unlock individual potential among marginalized populations including women, youth, displaced people, migrants, and those in vulnerable situations.
An emerging multilateral priority
The inclusion of digital finance in the FF4D Ministerial outcome document—officially known as the Compromiso de Sevilla—is now evidence of its emergence as a multilateral priority. Adopted by consensus among Member States in the opening plenary, the Compromiso offers a blueprint with concrete commitments from its Member State parties and calls upon UN agencies, International Financial Institutions, and private sector companies to utilize technology, digital tools, and instruments, including digital financial services to finance development and increase scale and impact.
More specifically, the Compromiso highlights the importance of and commits to advancing efforts and supporting the capacity of countries—as well as individuals and businesses—to utilize digital financial tools. It recognizes that promoting digital literacy, increasing access to financing for small and medium-sized enterprises (SMEs), reducing remittance costs, and strengthening correspondent banking relationships are all means to ease money flows, lower transaction costs, and increase economic activity. These efforts can drive investment and spending, ultimately generating government revenues and helping to open up fiscal space. Emerging use cases and evidence (see for example this OECD study utilizing blockchain for remittances) demonstrate the opportunities now available.
Strengthening regulatory frameworks, building on proven approaches
On a systemic level, the Compromiso emphasizes the importance of enhancing connectivity, policy structures, regulatory frameworks, and local banking partnerships (especially those that extend reach into remote or disadvantaged communities). At the same time, Member States pledged to take steps that catalyze fintech industry growth without endangering data privacy or consumer safety. Ironically perhaps, while the U.S. withdrew from the FFD4 process on 17 June, its passage on 17 July of the GENIUS Act, for example, could further global legislative reforms and push coordination that advance stablecoins and digital money (and might offer a pathway for the U.S. to re-engage with FFD at a later date).
Mitigating the risks of central bank digital currencies (CBDCs) and inter-operable settlement systems in financing development are also among the international financial architecture objectives stemming from Seville. In that regard, the Compromiso invites the Bank for International Settlements (BIS) to adopt the G20 Roadmap for Enhancing Cross-border Payments forward, bringing in more perspectives from and—along with the IMF and other relevant institutions—helping to bolster the capacities of Global South countries to strengthen payments infrastructure.
Measures could include CBDC creation and fast payment systems that utilize digital technologies and platforms, increase efficiency of cross-border payments, and address potential macroeconomic risks. Here there is space to build on existing pilots and initiatives such as the World Bank, BIS, and Swiss National Bank’s Project Promissa which created a platform to manage tokenized promissory notes from contributing member countries across international financial institutions.
Seville sets a clear foundation for widening the aperture and deployment of digital financial services and assets to finance sustainable development. And, with explicit commitments to convene, share, and track progress through the ongoing annual ECOSOC FFD Forum platform, it is clear that the United Nations intends to keep the multilateral spotlight shining.
Featured Author:
Dr. Nicole Goldin is Head, Equitable Development at UNU-Centre for Policy Research (UNU-CPR) and Senior Fellow, Atlantic Council Geoeconomics Center. She has been a member of BWC since 2024.
All views expressed by members are their own and not reflective of the views of the Bretton Woods Committee.
Featured Photo by IISD/ENB | Mike Muzurakis