The Bank for International Settlements (BIS) is to create an innovation hub in a bid to “foster international collaboration” on technology within the central banking community.
The scheme was announced by BIS – the bank for central banks that “fosters international monetary and financial cooperation” – over the weekend, and will be spread across multiple regions in Europe, Asia and the Americas.
It is designed in response to the growing digitisation of financial services, as an effort to better prepare central banks for future trends in the industry.
BIS chairman of the board Jens Weidmann said: “The IT revolution knows no borders and therefore has repercussions in multiple locations simultaneously.
“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.”
Bank for International Settlements Innovation Hub will support private fintech sector
The emergence and expansion of technology-driven products and services around the world continues to gather pace, and it is incumbent upon financial policymakers and authorities to be able to develop their own practices accordingly.
Announcements like Facebook’s Libra cryptocurrency last month serve as a reminder for central banks of this need to be prepared for new directions in the industry.
BIS economic consultative committee chairman and Bank of England governor Mark Carney, who last month cautiously welcomed the introduction of Libra, said: “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.”
Bank for International Settlements Innovation Hub will operate around the world
The early stages of the innovation scheme will involve the establishment of hub centres at existing BIS facilities in Basel and Hong Kong, with a third centre expected to be opened in Singapore.
Further expansion across Europe and the Americas will be carried out as part of a second phase of implementation.
BIS general manager Agustín Carstens added: “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.
“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.”
