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The Singapore branch of the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank have completed prototypes for a common cross-border payments platform using multiple central bank digital currencies (mCBDCs). Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions.

The BIS Innovation Hub Singapore Centre and partners successfully connected the test versions of three established instant payment systems (IPS) using the Nexus model. The next phase of the project will work on the real-world potential of a multilateral network that could be scaled up across more countries. The year-long collaboration included the Bank of Italy, Central Bank of Malaysia (BNM) and Monetary Authority of Singapore (MAS). Test payments were initiated using only the mobile phone numbers or the recipients' company registration numbers via the Eurosystem's TARGET Instant Payment Settlement (TIPS), Malaysia's Real-time Retail Payments Platform (RPP) and Singapore's Fast and Secure Transfers (FAST) payment system. For the next phase of the project Bank Indonesia, BNM, Bangko Sentral ng Pilipinas, MAS and the Bank of Thailand will leverage experiences from Phase I and Phase II of the project towards connecting their countries' IPS and facilitate cross-border transactions across a combined population of about 500 million people. Looking ahead, the BIS and the five central banks envisage that Nexus could eventually be implemented globally. To achieve this, they will aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project's development beyond the Southeast Asian region. The Bank of Italy and the European Central Bank will be invited to join this panel.

The Committee on Payments and Market Infrastructures (CPMI) published a brief that highlights key payment trends as observed in the 2022 Red Book statistics (available at the BIS Data Portal). These statistics were collected in the second half of 2023 from CPMI member jurisdictions. The use of digital payment methods continues to increase, particularly for small amounts. In tandem, cash withdrawals and the number of small-denomination banknotes in circulation have declined. Fast payments reached new heights and are a prominent driver of the digitalisation of countries' payment ecosystems. Even so, consumers continue to use cash to pay at home and abroad: both cross-border card and e-money payments and cross-border cash withdrawals increased sharply in 2022. (Data portal: https://data.bis.org/topics?topicFilter=CPMI)

In February 2023, the Bank for International Settlements (BIS) Innovation Hub published its 2023 workplan that included Project Pyxtrial, aimed at building a stablecoins monitoring platform to ensure that the backing assets at least match the stablecoin issuance. That was the last I heard of it, but I just came across a request for quotation (RFQ) that was published in August 2023 for "visionary partners with outstanding experience and technological capabilities to join [the London Centre] to design and build prototypes of the data reporting pipeline. The RFQ was supposed to have closed in September 2023 and the work started in October.

94% of the 86 central banks surveyed (between October 2023 and January 2024) by the Bank for International Settlements (BIS) are exploring central bank digital currency (CBDC). 54% are experimenting with proofs of concept and 31% are running a pilot. Around 30% of central banks focus on retail CBDCs only and 2% are working on wholesale CBDCs only, and it is more likely that central banks will issue a wholesale CBDC within the next six years than retail CBDC. More emerging market (EMDE) central banks are likely to issue a retail CBDC on a distributed ledger than advanced economy (AE) central banks, perhaps reflecting a willingness to leapfrog moving from legacy systems to cutting-edge technologies. Also, this year the survey also provides insight into the use of stablecoins for payments and regulatory approaches to crypto-assets across the globe.

The Board of the Bank for International Settlements has approved the establishment of a BIS Innovation Hub to foster international collaboration on innovative financial technology within the central banking community.

The Riksbank is making a bid to host a BIS Innovation Hub, a new initiative by the "bank of central banks" that now wants to scatter the world with local financial innovation policy clearinghouses.

The G20 and the Bank for International Settlements Innovation Hub launched the G20 TechSprint Initiative to highlight the potential for new technologies to resolve regulatory compliance (RegTech) and supervision (SupTech) challenges. The BIS Innovation Hub published high-priority RegTech/SupTech operational problems and invited private firms to develop innovative technological solutions. The problem statements identify challenges in regulatory reporting, analytics, and monitoring and supervision, and have been developed from submissions received from Financial Stability Board member jurisdictions.

The BIS Innovation Hub and SWIFT announced the three winners of the ISO 20022 hackathon, which invited teams to build and showcase solutions that enhance cross-border payments, using the ISO 20022 standard for payments messages and application programming interfaces (APIs).

"The Hub is just like a global accelerator program, but for central banks, and run by the BIS, which is both a convener and adviser. In the pantheon of global agencies and regulatory associations, the Hub clearly stands out as a use case for its agile and innovative project execution capability. This is not too surprising and rather welcome - it is after all one of the oldest and most experienced collaborative innovation communities on the planet."

The Bank for International Settlements (BIS) Innovation Hub, Bank of France and Swiss National Bank launched Project Jura that, together with a private sector consortium led by Accenture, will conduct an experiment using wholesale central bank digital currency (wCBDC) for cross-border settlement on a distributed ledger technology (DLT) platform. The private sector consortium includes Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS. It will involve the exchange of financial instruments against a euro wCBDC through a delivery versus payment (DvP) settlement mechanism and the exchange of a euro wCBDC against a Swiss franc wCBDC through a payment versus payment (PvP) settlement mechanism. These transactions will be settled between banks domiciled in France and in Switzerland, respectively.

Most central banks are exploring central bank digital currency (CBDC) according to the third annual Bank for International Settlements (BIS) survey. Central banks are progressing from conceptual research to practical experimentation, but most have no plans to issue CBDCs in the foreseeable future. However, central banks collectively representing a fifth of the world's population are likely to launch retail CBDCs in the next three years. The Covid19 pandemic has added new motivations to this journey.

Fun fact: A recent Bank for International Settlements (BIS) paper analyzing correlations between crypto investment choices and the level of education and income, suggested that crypto owners are "generally more educated than the average," especially XRP and ETH hodlers.

This could logically mean a new enhanced role for the BIS, which coincidentally relies on a primitive kind of "stablecoin": the BIS's vast reserves, accounting for close to 7 per cent of the world's total currency, are held via a BIS unit of account denominated in IMF special drawing rights, which in turn are pegged to a basket of convertible currencies. It would be a small step to ensure there is life after Libra, albeit with central banks in charge.

Credit markets around the world are undergoing a transformation. Fintech and big tech firms are providing more lending to households and small businesses. Using a new BIS database, this column estimates that fintech credit flows reached $223 billion in 2019, while big tech credit reached $572 billion. Both forms of credit are larger where there is greater (unmet) demand for credit and where economic and institutional factors favour the supply of such lending. The Covid-19 pandemic represents an important test for these new business models. https://www.bis.org/publ/work887.htm

Information on the size and characteristics of fintech and big tech credit is scarce. This BIS paper assembles and updates available data on fintech and big tech credit volumes for 79 countries around the world over 2013-19. The database is made available as a resource for researchers, policymakers and practitioners. The paper answers the questions: how large are fintech and big tech credit markets, both in absolute terms and relative to overall credit markets? What economic and institutional factors are driving their growth and adoption? How large and important could they become in the future?

The BIS Innovation Hub (BISIH) and the Hong Kong Monetary Authority (HKMA) have launched a TechChallenge designed to showcase the potential for new innovative technologies to resolve problems in trade finance (TradeTech). It is supported by the Asian Development Bank, the International Chamber of Commerce, the International Institute of Finance, the People's Bank of China and the Wolfsberg Group.The BISIH has published three problem statements and invites private firms to develop technology solutions: (i) connecting digital islands and increasing network size and effects, (ii) trade finance inclusion for SMEs, and (iii) TradeTech for emerging markets.

The Bank for International Settlements (BIS) announced the three winners of the G20 TechSprint challenge. The hackathon-style competition was launched in April 2020 to highlight the potential for technology to resolve regulatory compliance (regtech) and supervisory (suptech) challenges. The winners, chosen by an independent panel of experts, addressed one or more of its three problem topics. FNA won the dynamic information-sharing category for their solution FNA Platform for Dynamic Information Sharing and Real-Time Analytics, Tookitaki won in the monitoring and surveillance category for their solution Crypto-currency AML Typology Repository Management and ISDA-REGnosys won the regulatory reporting challenge for their solution Consistent Regulatory Reporting via the Common Domain Model.

A Bank for International Settlements (BIS) working paper suggests that use of massive amounts of data by large technology firms (big techs) to assess firms' creditworthiness could reduce the need for collateral in credit markets. Using a unique dataset of more than 2 million Chinese firms that received credit from both an important big tech firm (Ant Group) and traditional commercial banks, the paper finds that a greater use of big tech credit, granted on the basis of machine learning and big data, could reduce the importance of collateral and potentially weaken the financial accelerator mechanism. https://www.bis.org/publ/work881.htm

The BIS Committee on Payments and Market Infrastructures (CPMI) published a review of recent developments in retail fast payment systems (FPS). It notes that FPS can have significant implications for the operations and services of real-time gross settlement (RTGS) systems, including potential modifications to their access criteria and operating hours. The report also finds that FPS adoption rates are generally low in the early stages of implementation, but some recent ones have seen more rapid take-up. Also, FPS are increasingly settling obligations between banks and, where relevant, non-bank FPS participants on a gross (ie payment-by-payment) basis in real time, and most jurisdictions have either adopted or are moving towards ISO 20022 as the FPS messaging format.