In the Loop #14

Hi Suptech Community,

Welcome to the 14th issue of the Cambridge SupTech Lab bi-weekly LinkedIn newsletter, a source for updates on recent innovations, breakthroughs, opportunities, upcoming events in the suptech field, and news from the Cambridge SupTech Lab team.

If you would like to flag any items for inclusion in the next newsletter, please email us at [email protected]. Occasionally, we also email our global community of supervisors, data scientists, vendors, and suptech experts to share event invites, news, or new courses—subscribe here.

This edition includes news from the Bank for International Settlements – BIS, Sveriges Riksbank, European Central Bank, Toronto Centre, The World Bank, Monetary Authority of Singapore (MAS), Central Banking, IOSCO, and others.

Suptech Innovations

Central Banks are embracing digitalisation. Despite a reputation for conservatism, financial authorities are taking bold steps to review their internal processes and find ways of deploying technology to work in a more efficient, agile and impactful way, as unveiled in the recently published Central Banking Awards 2024 winners. Some notable suptech initiatives and innovations that have bagged an award include:

·??????? Digital transformation award: SSM digitalisation blueprint

·??????? Initiative of the year: The Netherlands Central Bank’s (DNB) ChatDNB

·??????? Payments and market infrastructure initiative: Central Bank of Kenya’s DhowCSD

·??????? Regulatory technology services: Regnology

·??????? Green initiative: Bank for International Settlements

·??????? Digital currency initiative: eCurrency’s DSC3

·??????? Risk management initiative: AML Analytics’ Orbs

· Risk management services: SQL Power Group

·??????? Technology services: Iris

Bank of International Settlements (BIS) and central banks develop artificial intelligence (AI) tool to enable climate risk analysis. In a collaborative initiative dubbed “Project Gaia”, the BIS, Bank of Spain, European Central Bank and Deutsche Bundesbank, have developed a generative AI tool to help measure climate risks in the financial system. By automating information extraction, the Gaia proof of concept enables the comprehensive analysis of climate-related indicators and offers harmonised metrics despite the heterogeneity of naming conventions and definitions across different jurisdictions. Read more here.

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Central Banking & Technology

Monetary Authority of Singapore (MAS) launches a platform to tackle money laundering. The MAS has launched COSMIC, centralised digital platform to facilitate sharing of customer information among financial institutions to combat money laundering, terrorism financing and proliferation financing globally. The platform was built by MAS with six major banks that will be its first users - DBS, OCBC, UOB, Citibank, HSBC and Standard Chartered. Read more here.

Bank for International Settlements (BIS), central banks and banking sector to explore tokenisation of cross-border payments. Project Agorá, a collaborative effort between the BIS and seven central banks, is set to involve the private sector in investigating how the tokenisation of wholesale central bank money and commercial bank deposits on programmable platforms can improve the monetary system. The primary area of exploration will be to increase the speed and integrity of international payments while lowering costs. Read more here.

Sveriges Riksbank uncovers challenges in offline Central Bank Digital Currency test. Sweden’s central bank has released its fourth and final report on its digital krona pilot project. The Riksbank designed a system using payment cards and shadow wallets, but security and accounting problems remain. Nevertheless, the financial authority concludes that it should be possible to develop a secure and usable offline solution with the right boundaries and regulatory framework. Read more here.

The US and UK sign landmark agreement to test AI models for safety threats. The governments of the UK and USA have signed a memorandum of understanding to collaborate on testing and mitigating the risks of artificial intelligence (AI) models. This landmark deal aims to regulate AI safety by sharing technical knowledge, information, and talent between the two countries. Read more here.

IOSCO consults on business models of ever-expanding exchanges. The International Organisation of Securities Commissions (IOSCO) has launched a consultation paper to examine the evolving business models and ownership structures of stock exchanges and other market infrastructures. This includes assessing the risks associated with their expansion and diversification, as well as the impact of trends like outsourcing and operating regulated and unregulated businesses under one roof. The paper outlines a set of six good practices for regulators to consider in the supervision of exchanges. Comments on the consultation report should be sent on or before 03rd July 2024. Read more here.

Brunei and Laos central banks formally join Regional Payment Connectivity Initiative (RPC). Brunei Darussalam Central Bank and Bank of the Lao are now part of a region-wide initiative that aims to improve cross-border payments in the ASEAN region.? There are now a total of eight ASEAN central banks in the regional payment link. Read more here.

European Central Bank (ECB) and European Banking Association (EBA) intensify efforts to improve reporting. The ECB and EBA have established the Joint Bank Reporting Committee (JBRC), which is tasked with helping to develop common definitions and standards for the data that banks are required to report for statistical, supervisory and resolution purposes. The two institutions aim to harmonise and integrate data reporting by the banking industry to improve efficiency and reduce the associated costs. Read more here.

BIS expands the scope of its suptech and regtech theme to include monetary policy tech. As more than 80% of central banks used big data to support their economic analyses and policy decisions as of 2021, the BIS has expanded its research to include monetary policy tech. With this, the BIS aims to develop tools that could benefit from new technologies to help policymakers strengthen the effectiveness of their policy work. The BIS Innovation Hub has launched Project Neo, which is the first in a series of planned experiments, to understand how advanced data analytics can help central banks in their core mandates. Read more here.

Four Essential Steps for Central Banks to Adopt AI Responsibly. The journey towards responsible AI adoption is complex, demanding a balanced approach integrating innovation with ethical considerations, security, and global collaboration. In this blog, Xiaochen Zhang, Executive Director of the think tank AI 2030, presents four essential steps for central banks to adopt AI responsibly. Read more here.

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Events

Alliance for Innovative Regulation and Cambridge SupTech Lab's NextGenAI Tech Showcase on 25th April 2024:?Do you want to see real-life examples of generative AI enabled solutions that could positively support the supervisory activity of financial authorities?and aid regulated entities in ensuring compliance efficiency? Sign up to attend a virtual solution showcase to learn, explore the possibilities of the latest technology, and collaborate.?Register here.

3i Africa Summit: Unleashing Africa’s Fintech and Digital Economic Potential. A groundbreaking global event centred on transforming Africa’s economic landscape through sustainable long-term capital allocation. Taking place 13-15 May 2024, at the Accra International Conference Centre in Ghana, it addresses the critical need for a sustainable growth framework in Africa. The summit will address key opportunities for growth within Africa’s fintech sector, explore how markets and companies are surpassing legacy technologies, and drive much-needed dialogues around policy, finance, and technology with a focus on inclusion and sustainability.?The key areas of focus are policy and regulatory support for sustainable investments, structuring SMEs for robust economic contribution, and creating strategies for long-term capital investment for sustainable growth.?Learn more and register here.

Global Government Fintech Lab 2024. This third Fintech Lab event, hosted by Global Government Fintech, will bring together public servants worldwide to share expertise and experience in how governments, including financial authorities, explore financial technology. The event will take place in Dublin, Ireland, on 25th April 2024 and will include keynotes, panel discussions, fireside chats, and international networking. Read more and register here.

“Banca d’Italia, Bocconi University and CEPR Conference Financial Stability and Regulation”. This conference, which took place between April 4th and 5th, 2024, brought together leading world scholars and policymakers to discuss topics related to financial stability, regulation of the financial sector, and the use of macroprudential policies. Cédric Huylebroek from KU Leuven presented the paper “The Disciplining Effect of Bank Supervision: Evidence from SupTech” on how the Central Bank of Brazil’s supervisory actions arising from its SupTech application affected bank balance sheets and lending and the spillover effects to the real economy.?

Launch of the Future Finance Forum at International Monetary Fund (IMF)/World Bank Spring Meetings. At this year’s IMF/World Bank Spring Meetings, held on 16th April 2024 at the World Bank, the Future Finance Forum, a new global collaboration to put low- and middle-income countries (LMICs) at the centre of Central Bank Digital Currency (CBDC) and Digital Public Infrastructure (DPI) research, was launched.?? The Future Finance Forum aims to build a new model for how academia, government, civil society, and the private sector can collaborate with LMICs to advance responsible CBDC and DPI exploration. Read more and register here.

Secondment opportunities at the BIS Innovation Hub. The BIS is looking for central bank secondees to join its multicultural and multidisciplinary teams in Basel, Frankfurt, Hong Kong SAR, Paris, Singapore, Zurich, Stockholm and Toronto. While some candidates will contribute to a wide range of project-related activities that explore the impact of technological developments on financial markets and central banks, others will contribute to the preparation of strategy documents, background notes and reports for the BIS governing bodies among other duties. Read more and register by 12th May 2024 here.

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