The Bank for International Settlements (BIS) has announced plans to establish an innovation hub to “foster international collaboration on innovative financial technology within the central banking community complementing the already well established cooperation within the existing committees”.
The role of the BIS Innovation Hub will be, the bank says, to identify and develop in-depth insights into critical trends in technology affecting central banking; develop public goods in the technology space geared towards improving the functioning of the global financial system; and serve as a focal point for a network of central bank experts on innovation.
“The IT revolution knows no borders and therefore has repercussions in multiple locations simultaneously,” says Jens Weidmann, chairman of the BIS board of directors. “The establishment of the BIS Innovation Hub will enable central banks to extend their existing collaboration with a view to identifying relevant trends in technology, supporting these developments where this is consistent with their mandate, and keeping abreast of regulatory requirements with the objective of safeguarding financial stability. There are significant economies of scale in such an endeavour, and the BIS is the ideal vehicle to realise them.”
Mark Carney, chair of the Economic Consultative Committee, adds, “There is a new economy emerging driven by changes in technology, demographics and the environment. While the private sector is driving these innovations, their efforts will be more effective if the hard and soft infrastructure of the global financial system support this innovation, promote resilience and level the playing field on which to compete. Central banks have a major role to play. The BIS Innovation Hub will foster collaboration between central banks and, by extension, help the private sector to fully realise these major opportunities.”
The BIS says the hub will span multiple locations and will initially be established in Basel and Hong Kong to enable it to use established BIS facilities, however a third hub centre will be established in Singapore, subject to the completion of the necessary institutional arrangements, also as part of the initial phase.
The set-up and ongoing work of the hub centres will be carried out in close collaboration and with the support of the host central banks: the Swiss National Bank, Hong Kong Monetary Authority, and Monetary Authority of Singapore. Additional centres across the Americas and Europe will be added as part of a second phase of implementation, the BIS says.
“I am pleased with the trust and the confidence that our membership has placed in the BIS and its staff to take on this important task,” says BIS general manager Agustín Carstens. “With the establishment of a network of central bank experts on technology and innovation, we will now intensify work on a set of projects that reflect the innovation priorities of the central banking community and which could be scaled up through international cooperation over a relatively short period of time.”