Group items tagged

BoE Governor Carney highlights the opportunities offered by Fintech, saying we're moving to a new kind of economy, which needs new kinds of financial services. He explains what the BoE is doing to embrace and support this financial innovation.

ChainThat has been approved as the first company to join The Bermuda Monetary Authority's (BMA) Innovation Hub and will house its Distributed Ledger Technology (DLT) driven risk and capital exchange there for the duration of its trial period.

The Monetary Authority of Singapore (MAS) today launched Sandbox Express to provide firms with a faster option to test innovative financial products and services in the market.

Stablecoins Vulnerable to Regulatory Uncertainty: European Central Bank "Less innovative stablecoins could provide a solution to users Seeking a stable store of value, especially if legitimised by the adherence to standards that are typical of payment services, the jury is still out on the potential future role of more innovative stablecoins outside their core user base."

This Circle Research report identifies innovative work by the technical community on developing and experimenting with sustainable governance and funding models and the analytical community on creating innovative ways to evaluate crypto networks.

The BIS and the HKMA have today signed an Operational Agreement on the BIS Innovation Hub Centre in Hong Kong. The Hub will identify and develop in-depth insights into critical trends in technology affecting central banking... Hub Centres will be set up in Hong Kong, Singapore and Basel, Switzerland, in the initial phase.

The MOU aims to provide a framework for closer cooperation between the Philippine and Indonesian central banks to achieve enhance their payment systems and promote digital financial innovation.

David Longworth, former Deputy Governor of the Bank of Canada on the major macro-level risks arising from current and future digital financial innovation and what the implications are for Canadian regulators. Regulators should enact a number of policies, including requiring the use of Explainable AI (XAI) in lending decisions, taking care not to rush into open banking regulations, extending the coverage of stress tests to include stresses relating to borrowing from non-bank financial intermediaries, and increasing the amount of data on lending and short-term financing from lenders, whether regulated or not.

A payments revolution has prompted a proliferation of shadow digital money. This money is unsound. It is not insured by the government, nor is it backed by safe assets. Federal regulation is needed to guarantee safety and soundness, to restore full monetary control to the Federal Reserve, and to prevent a race to the bottom between competing state and federal regulatory regimes. Congress should pass new legislation preempting state money service businesses (MSBs), offering federal MSB charters, and authorizing the OCC to establish a special regulatory regime for MSBs that restrict issuers to investing in cash and cash equivalents at banks or the Federal Reserve. With these changes, innovation in payments is just that - innovation in payments-and not also unauthorized and unsound money issuance.

The South Africa Reserve Bank has established a new fintech innovation hub, in collaboration with several other government agencies.

The Jamaican central bank announced FinTech Regulatory Sandbox Guidelines. The objectives "are to provide a platform to encourage innovations in financial services, promote competition and promote financial inclusion. In the initial phase, Regulated Entities and Fintech companies in partnership with Deposit Taking Institutions for delivery of payment services or such other financial services will be allowed to operate in the Sandbox to promote innovation.

"As policymakers and regulators develop regulations to oversee DeFi markets, they must balance the need to support financial services innovation with the need to protect consumers, fight crime, and preserve financial stability. Doing so may not be as straightforward as it was for the initial wave of cryptocurrency activities. Regulators may require more policy and legal innovation to address DeFi's trend toward disintermediation and to support a more open, interoperable, and competitive financial infrastructure."

The Bank for International Settlements' Innovation Hub (BISIH) set out its work program, focusing on six key areas; suptech and regtech, next-generation financial market infrastructures, central bank digital currency (CBDC), open finance, green finance, and cyber security. The CBDC theme will include a proof of concept platform using multiple wholesale CBDCs to explore the feasibility of faster and cheaper cross-border payments, and a technological research project and associated prototype(s) for tiered retail CBDC distribution architectures.

"To be clear, we are strong proponents of innovations that reduce costs and improve welfare. But the most important innovations-those that improve the payments system and the supply of credit, do not require universal CBDC and its inherent risks. So, why are central banks so intent on preparing? What is the purpose of such contingency planning? "

A Bank for International Settlements (BIS) paper examines how CBDCs can contribute to an open, safe and competitive monetary system that supports innovation and serves the public interest. Like the latest generation of instant retail payment systems, retail CBDCs could ensure open payment platforms and a competitive level playing field that is conducive to innovation. The ultimate benefits of adopting a new payment technology will depend on the competitive structure of the underlying payment system and data governance arrangements. The same technology that can encourage a virtuous circle of greater access, lower costs and better services might equally induce a vicious circle of data silos, market power and anti-competitive practices. CBDCs and open platforms are the most conducive to a virtuous circle. CBDCs built on digital identification could improve cross-border payments, and limit the risks of currency substitution. Multi-CBDC arrangements could surmount the hurdles of sharing digital IDs across borders, but will require international cooperation.

The Monetary Authority of Singapore launched the Global CBDC Challenge, to seek innovative retail central bank digital currency (CBDC) solutions to enhance payment efficiencies and promote financial inclusion. Partners include the International Monetary Fund, World Bank, and the Organisation for Economic Co-operation and Development. Firms around the world are invited to submit innovative solutions that can address 12 problem statements centred on the CBDC instrument, distribution; and infrastructure.

This Bank of Canada staff discussion paper discusses the competition and innovation arguments for issuing a central bank digital currency (CBDC). A CBDC could be an effective competition policy tool for payments. A CBDC could also support the vibrancy of the digital economy. It could help solve market failures and foster competition and innovation in new digital payments markets.

The World Economic Forum's Centre for the Fourth Industrial Revolution Network has built a global community of central banks, international organizations and leading blockchain experts to identify and leverage innovations in distributed ledger technologies (DLT) that could help usher in a new age for the global banking system.

Mastercard has introduced its Innovation Engine, an API based plug-and-play digital platform that enables issuers and merchants a simplified path to rapidly deploying digital capabilities and experiences to their customers. It will deliver unique and digitally integrated solutions and consumer experiences through a single connection.

"We appreciate the fact that this proposal avoids technology-specific standards like the Swiss-rule and draconian restrictions like those FATF has contemplated. Nonetheless this rulemaking takes a bulk warrantless surveillance regime and applies it to an innovative technology with little opportunity for public comment. This is especially problematic given the complicated implications of the proposed recordkeeping requirements which may, as described in the next section, meaningfully stymie innovation. A fifteen day period is simply not enough time to work through these implications."