The director of the New York Innovation Centre (NYIC), a partnership between the Bank for International Settlements (BIS) Innovation Hub network and the Federal Reserve Bank of New York, has urged external experts to consider involvement with its projects in areas including digital currencies and climate risk.
Per von Zelowitz was speaking at a New York Fed-hosted virtual event to formally launch the NYIC, which will collaborate with the US Federal Reserve System, the growing number of BIS Innovation Hub centres worldwide, as well as the public- and private-sector, to ‘explore the development of public goods that enhance the functioning of the global financial system’.
The BIS Innovation Hub was established by Switzerland-headquartered BIS two years ago to identify and develop insights into fintech trends, explore the development of tools to improve the functioning of the global financial system and become a focal point for central bank experts on innovation. Its footprint has expanded to now comprise centres in BIS’s home city of Basel, Switzerland, as well as Hong Kong, Singapore and recently opened centres in London and Swedish capital Stockholm (covering the Nordics).
Von Zelowitz, who was announced as the NYIC’s first director in July, told the event’s online audience that activity in the Big Apple centre would initially be focused on five “opportunity areas”: SupTech and RegTech; financial market infrastructures; the ‘future of money’, including central bank digital currencies (CBDCs), crypto-currencies and stablecoins; open finance; and climate risk, for example the use of advanced data analytics. These topics are in line the BIS Innovation Hub’s overall work programme for 2021-2022, which was presented in January.
The NYIC’s broader objective is to provide an “innovation execution capability not to just to the New York Fed but also the entire Federal Reserve System,” explained von Zelowitz at the webinar. Boston Fed’s explorations into central bank digital currencies (known as ‘Project Hamilton’) and the TechLab multi-disciplinary team initiative were referenced as examples of ongoing innovation-based Fed initiatives.
Collaboration ‘critical’ for success
“Collaboration is absolutely a critical success factor for us. The way we will be successful over the long-run is by bringing together the right partners to collaborate on each of the different opportunities and projects,” said von Zelowitz, who previously worked in the private sector for PwC, and, before that, for Citi Ventures in the role of ‘senior entrepreneur in residence’ and founding member of D10X, Citigroup’s corporate incubator.
“I view the New York Innovation Centre as a central node in an innovation network and we want to find and collaborate with subject-matter experts who are truly the deep experts in the specific areas that we are focused on. We also want to collaborate, for example, with organisations that provide us with execution capabilities, so engineering, product development – that’s a key part of our model.”
“I would keep it super-simple,” he advised those watching the webinar, which was held on Monday (29 November). “If you think the work your organisation is doing is very much in line with one of our opportunity areas or you think you can contribute effectively to some of the interesting problems we are trying to solve, please get in touch,” he said.
The virtual event kicked off with remarks from the New York Fed’s president, John Williams; Jerome Powell, recently re-nominated chair of the board of governors of the Federal Reserve System; and BIS’s general manager, Agustín Carstens.
Carstens, who described the BIS Innovation Hub as “not a think-tank but a laboratory”, set out the ways in which the world of central banking is “rapidly evolving”, driven by technology. Central banks, he said, “need to explore new worlds inhabited by software engineers, cloud architects, data scientists, cryptography experts and social science experts”.
‘Open up the conversation’
The NY Fed-hosted online event also included a panel discussion involving von Zelowitz, BIS Innovation Hub head Benoit Coeure and two representatives of the private sector: Amy Nauiokas, founder and chief executive of Anthemis, a fintech investment platform; and Raj Seshadri, Mastercard’s president of data and services.
Coeure said the BIS Innovation Hub now was running 11 projects in total across the five existing centres (excluding NYC) and it was “populating them with projects”.
Examples of ongoing projects include blockchain-based ‘Project Genesis’ exploring the tokenisation of green bonds (with the Hong Kong Monetary Authority) and ‘Project Nexus’ exploring faster international payments (with the Singapore Monetary Authority), as well as projects on the hot topic of CBDCs.
The Innovation Hub is also involved in developing proofs-of-concept and prototypes, as well as running hackathons and organising staff exchanges.
Nauiokas championed “collaboration and execution”, saying that fintech innovation was a “long game… not counted in years but in decades and, in some cases, in centuries”. She urged central bankers to “open up the conversation” to “voices of the future”, including start-up companies, and to “be careful of the clubbiness that can happen in the central bank community”.
Seshadri, meanwhile, specified cyber-security, analytics, artificial intelligence (AI), the Internet of Things and digital currencies as among trends of particular interest to Mastercard. She said of the company: “we call ourselves a ‘big fintech’ – so, we don’t think of ourselves as an incumbent [big established company] as much as [we do] a very innovative place.”
London, Nordic and Toronto appointments
The BIS Innovation Hub announced heads for its London and Nordic centres earlier this month, as well as the head for a further yet-to-open centre in Toronto, Canada.
Francesca Hopwood Road, currently head of regulation technology and advanced analytics at the UK’s Financial Conduct Authority, will lead the Hub’s London centre. Beju Shah, meanwhile, will head to Sweden to run the Nordic centre. He is presently special adviser for digital innovation at the Bank of England (BoE). Miguel Díaz, currently general director of payment systems and market infrastructures at the Bank of Mexico, will run the Toronto centre. All three will start in early 2022.
The London and Nordic centres launched in June. They are operated in collaboration with host central banks: the BoE for London, and the central banks of Denmark, Iceland, Norway and Sweden for the Nordic centre. The Toronto centre will open next year in collaboration with the Bank of Canada and ‘will serve as a key platform for central bank innovation in the Western Hemisphere’, according to BIS.
An further Innovation Hub dual-location centre hosted by the European Central Bank/Eurosystem is scheduled to open next year in the German city of Frankfurt and French capital Paris.
‘BIS Innovation Hub centres open in Sweden and UK’ – our news story (16 June 2021) on the opening of the Nordic centre (in Stockholm) and Bank of England-hosted centre
‘CBDCs and SupTech among priorities as BIS Innovation Hub maps out 2021 agenda’ – our news story (23 January 2021) on the BIS Innovation Hub’s current work programme (2021-2022)
“Bank of England to host fintech ‘Innovation Hub’” – our news story (3 July 2020) on BIS’s announcement of its plans to expand its Innovation Hub network to “create a global force for fintech innovation”