BIS Innovation Hub Sets Out 2021 Work Programme
Six thematic priorities have been set out: suptech and regtech; next-generation FMIs; CBDCs; open finance; green finance; and cyber security.
The BISIH (BIS Innovation Hub) has set out six thematic priorities in its work programme for 2021, while concurrently announcing the launch of a formal network to facilitate knowledge-sharing on innovation among central banks.
The Innovation Hub was established by the BIS (Bank for International Settlements) in 2019, with a mission to foster international collaboration on innovative financial technology within the central banking community.
The first three BIS Innovation Hub Centres established in Hong Kong, Singapore and Switzerland will drive the BISIH initiatives. New Hub Centres across Europe and North America are also due to begin operations in the coming months.
The BISIH thematic priorities include:
Suptech and regtech: In 2020, the Singapore Centre concluded the G20 TechSprint, an initiative designed to showcase the potential for new innovative technologies to resolve operational problems in the areas of regulatory compliance and supervision.
The Swiss Centre will continue work on Project Rio, a prototype cloud-based market monitoring tool to alert central banks to market dislocations, liquidity issues, volatility and other market risks in real time.
In addition, a newly launched project at the Singapore Centre will seek to develop a proof of concept regulatory reporting platform that will enable real-time data analytics and data visualisation to provide supervisors with deeper and more timely insights to address risks.
Next-generation FMIs (financial market infrastructures): The Singapore Centre will continue ongoing work to explore how digital identity, payments and data-sharing can be made open, interconnected and available across borders.
The so-called FDI (Foundational Digital Infrastructure) project initially aims to develop a blueprint for a next-generation cross-border payments network that will involve the interconnection of existing rails across jurisdictions.
CBDCs (central bank digital currencies): The Swiss Centre will continue work on Project Helvetia, a Swiss National Bank (SNB) and SIX initiative to demonstrate the functional feasibility and legal robustness of integrating tokenised assets and central bank money in a near-live setup.
In addition, work will continue at the Hong Kong Centre to study the adoption of DLT to facilitate real-time cross-border fund transfers and atomic payment versus payment for foreign exchange transactions, building on the work of the HKMA (Hong Kong Monetary Authority) and BOT (Bank of Thailand) in project Inthanon-LionRock. The work will also seek to enhance a cross-border corridor network prototype to support CBDCs of other central banks.
The Hong Kong Centre will also explore different architectural models for the distribution of retail CBDC through commercial banks and payment service providers.
Another upcoming project at the Singapore Centre will explore the creation of common settlement infrastructure for cross border payments which would allow regulated financial institutions to purchase, exchange, transact in, and redeem wholesale CBDCs issued by different central banks.
Open finance: The Hong Kong Centre will continue ongoing work on digitising trade finance to address gaps in global trade financing. This work will include collaboration with the private sector towards the development of prototypes and proofs of concept that facilitate connections between digital islands, trade finance inclusion for SMEs, and tradetech for emerging market economies.
Cyber security: The Swiss Centre will BIS Cyber Resilience Coordination Centre hosted a Secure Coding Competition as an informal and friendly coding training for around 60 developers from more than 20 central banks in Q4 2020.
Green finance: The Hong Kong Centre will study the applicability and scalability of tokenised retail bonds to assess whether and how to pursue the introduction of tokenised green bonds in small denominations for retail investors.
The work programme is available here.
Also announced was the launch of the ‘BIS Innovation Network’, which will enable the BISIH to draw on the pools of talent and expertise on innovation that exist throughout the BIS’ membership.
Featuring six working groups to mirror the BISIH thematic priorities, the Network will provide a platform for knowledge sharing about technology projects and discussion on innovative answers to problem statements relevant to central banks, initially focusing on early stage problems/prototypes to kick-start collaboration.
The first meeting of the Network took place on 19 January 2021, where the chairs of the working groups were appointed. A second meeting of the Network will take place in July 2021.