At the end of January, the Bank for International Settlements (BIS) announced the first batch of new projects in its 2024 Innovation Hub work programme, including experimentations on cyber security, fighting financial crime, central bank digital currencies (CBDCs) and green finance.
Established in 1930, the BIS is owned by 63 central banks, representing countries from around the world that together account for about 95% of world GDP. Its head office is in Basel, Switzerland and it has two representative offices: in Hong Kong SAR and Mexico City, as well as Innovation Hub Centres around the world.
‘As the financial industry adopts new technologies, we need to understand how they affect central banks’ core work. Central banks are actively examining the potential for novel technologies to help deliver on their mandates,’ said Cecilia Skingsley, Head of the BIS Innovation Hub.
‘After completing 12 projects in 2023, we are looking forward to another busy year ahead, in collaboration with central banks, international organisations and other partners. Tokenisation is an important area where we have already launched one project and are planning more initiatives. Safety is another crucial area. We need to find ways to improve the efficiency of services like payments, without ever compromising on security, following the principle set by the G20 countries.’
Several of the projects are directly related to tokenisation, Central Bank Digital Currencies (CBDCs), digital assets and other blockchain technologies, including:
- Project Aurum, from the Hong Kong Centre, will study the privacy of payments in retail CBDCs. The goal is to leverage expertise from academia and privacy regulators to advance central banks’ understanding of privacy in the design of CBDC systems.
- Project Promissa, tests the feasibility of tokenising promissory notes, financial instruments that help fund multilateral development banks and other international financial institutions. In many cases, these are still paper-based. The project will use distributed ledger technology to simplify their management and transparency. It is conducted jointly with the Swiss National Bank and the World Bank, with the International Monetary Fund as an observer.
- Project Hertha, launched by the London Centre, aims to test the use of network analytics to help identify financial crime patterns in payment systems. It will map current and emerging financial crime typologies in real-time payment systems, drawing upon lessons from instant payment systems and digital asset networks.
- Project Symbiosis, from the Hong Kong Centre, will test the use of artificial intelligence (AI) and big data technologies for supply chain disclosure and adaptation. The project will seek to improve the tracking of so-called Scope 3 emissions, which are less well-defined and harder to track. It will do this by working with the private sector and civil society organisations in creating AI-supported methodologies for emissions disclosures by small and medium-sized companies.
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