The Bank for International Settlements (BIS) is to expand its ‘Innovation Hub’ network by establishing four further centres with central banks, including the Bank of England (BoE), as it looks to “create a global force for fintech innovation”. The Basel-based BIS, often referred to as the ‘central bank for central banks’, is to open two further centres in continental Europe and one in North America.
The Innovation Hub networks, which is overseen by former European Central Bank executive board member Benoît Cœuré, was established last year to encourage central banks to work more closely together on fintech-related topics. Among its current workstrands are the “development of regulatory and supervisory technological practices, the global payment stack, tokenisation, digitalisation of the trade process and monitoring of fast-paced markets”.
The Innovation Hub is being expanded from three existing hub centres in Singapore, Hong Kong and BIS’s home country of Switzerland in order to “spur central bank work across multiple fintech pillars”. Topics to come under closer examination include digital currency and digital payments, cyber security, distributed ledger technology and artificial intelligence. Cœuré said just a couple of weeks ago that COVID-19 has caused an “unprecedented experiment in digitalisation across our lives”.
‘Global force for fintech innovation’
As well as the BoE, the Innovation Hub is to gain new centres hosted by the Bank of Canada (Toronto), the European Central Bank/Eurosystem (Frankfurt and Paris) and four Nordic central banks (Danmarks Nationalbank, the Central Bank of Iceland, the Central Bank of Norway and Sveriges Riksbank) in Stockholm. The BIS will also form a ‘strategic partnership’ with the Federal Reserve System (New York).
The four new centres will expand BIS’s reach “significantly” and “help create a global force for fintech innovation”, said BIS general manager Agustín Carstens.
BoE governor Andrew Bailey said: “International collaboration is vital if we are to take full advantage of the possibilities offered by technology and innovation. Now more than ever it is important the central banking community does all it can to build a more effective, resilient and inclusive financial system, and technology is an important part of that effort.
“By involving central banks and prudential regulators in this important work, we can help to ensure that innovation is consistent with our objectives of safety and soundness and financial stability. This centre provides an important venue to ensure the UK’s deep expertise in innovation can contribute to solving global financial issues.”
BIS has also this week released its Annual Economic Report 2020, which contains a special chapter on central banks and payments in the digital era.
UK financial data R&D splurge
Separately in the UK, a centre set up in Edinburgh to “accelerate financial data collaboration” has secured £22.5m (US$28m) in funding from UK Research and Innovation’s (UKRI) Strength in Places Fund (SIPF). The Global Open Finance Centre of Excellence Fintech Hub (GOFCoE), which launched in 2018, has been confirmed as among the beneficiaries of a £186m (US$231m) R&D funding announcement aimed at boosting local economic growth across the UK.
GOFCoE is led by the University of Edinburgh, with the Financial Data and Technology Association (FDATA) and Fintech Scotland as partners.