The Bank for International Settlements’ Innovation Hub (BISIH) today outlined its work program, demonstrating its focus on six key areas as it fosters international collaboration among central banks on innovative financial technology.
The thematic priorities are:
- Suptech and regtech
- Next-generation financial market infrastructures (FMIs)
- Central bank digital currencies (CBDCs)
- Open finance
- Cyber security
- Green finance
Regarding central bank digital currencies, BIS notes Project Helvetia. The initiative was undertaken with the Swiss National Bank (SNB) and the financial infrastructure operator SIX. It demonstrates the functional feasibility and legal robustness of settling tokenised assets with a wholesale CBDC (proof of concept 1) and through linking a digital ledger technology platform to existing payment systems (proof of concept 2) in a near-live setup. This project is ongoing.
BIS also highlights an upcoming project about a platform for settling cross-border payments using multiple wholesale CBDCs. It explores the creation of an international settlement platform onto which central banks would issue multiple wholesale CBDCs. Regulated banks and payment service providers would then use the platform as a common settlement infrastructure, enabling participants to purchase, exchange, transact and redeem these different CBDCs.
An initiative that is ongoing is a project for a Multiple CBDC bridge. It builds on the experience of Inthanon-LionRock, a project of the Hong Kong Monetary Authority and the Bank of Thailand, to study the adoption of DLT to facilitate real-time cross-border fund transfers and atomic payment versus payment for foreign exchange transactions. The project also intends to enhance a cross-border corridor network prototype to support CBDCs of other central banks.
Finally, there are retail CBDC studies for the benefits and challenges of tiered architectures for the distribution of retail CBDC through commercial banks and payment service providers. This project will investigate two architectural models: hybrid CBDC and private CBDC-backed stablecoins.
The initiatives will be driven by the first three BIS Innovation Hub Centres in Hong Kong, Singapore and Switzerland which have been established in conjunction with their partner central banks: the Hong Kong Monetary Authority, the Monetary Authority of Singapore and the Swiss National Bank. Other initiatives will be undertaken by the planned new Hub Centres across Europe and North America when they begin operations in the coming months, as well as a Strategic Partnership with the Federal Reserve Bank of New York.