CBDCs and improvements in payment systems “continue to be an exploratory focus area” for the BIS.
The BIS seeks to “develop new technological public goods for central banks”.
The International Bank for Settlements (BiS, for its acronym in English), has as a goal for this 2022 to advance in the projects of regulatory technology and supervision of the transactions that are carried out with digital assets, such as bitcoin (BTC) and the rest of the cryptocurrencies.
The Bank, headquartered in Switzerland, communicated in a press release that, for this year, the Innovation Group (or Innovation Hub), which seeks from “identifying trends in financial technologies that are relevant to central banks”, will also launch new central bank digital currency projects (CBDC). They also plan to establish next-generation payment systems and decentralized finance (DeFi).
According to the institution, they seek to “develop new technological public goods for central banks”, while target green finance and cyber security projects.
This year marks a new phase in the expansion of the Innovation Hub, with the first projects at the London and Nordic Hubs; the expected opening of the Eurosystem and Toronto centres; and the advancement of the strategic partnership with the Federal Reserve System.
International Bank for Settlements.
According to the director of the Bank, Agustín Carstens, with the expanded network of centers and the projects to be launched this year, they provide a “more solid position to innovate in a solid and sustainable manner, taking advantage of the benefits of digital technology, serving the interest public and working in cooperation with the central bank, the community, academia and the private sector.
The bank highlights that CBDCs and improvements in payment systems “remain an area of exploratory focus”, representing, they say, 13 of the 17 projects currently active or due to be deployed during 2022.
The Bank for International Settlements, too, plans to carry out several initiatives of the Group of 20 (G20) to “enhance global cross-border payments”, through assessing the “practical and technological complexities involved in implementing different multi-CBDC agreements”.
The BIS detailed the projects that will soon be carried out. One of them is Rio, which will explore how central banks can use streaming data to police electronic markets.
The first phase builds a prototype that collects and processes large amounts of currency data in real time. In the next one, the team will design a “production-ready” user dashboard.
Another project, from Switzerland, joins the Central Bank of that country, “also compiling the lessons learned from two CBDCs, Helvetia II and Jura.” They will then look at CBDC-related projects that could use Arena, a private blockchain that is being built as a testing ground for the central banks of that country.
The Ellipse project builds a platform that will help financial regulators digitally extract, query and analyze data from various sources, “incorporating artificial intelligence and machine learning.”
In Singapore, meanwhile, the investigation of shared settlement platforms of several CBDCs continues, through the Dunbar project. In a second phase, they plan to interconnect the active payment systems in that country, in addition to Malaysia and Italy.
In Hong Kong, a project encompassing DeFi will seek to know if they can improve financing for small and medium enterprises, “a historically neglected market segment,” in the words of the Bank for International Settlements.
In London, United Kingdom, they will evaluate how people and companies can benefit from CBDCs. This, through a project that will allow the development of updated payment solutions, “that can be settled quickly and cheaply with money from the central bank.”
And a second project, they specify, will develop a platform that supports applications that people and companies can use to store, transfer and pay with CBDC to retailers.
Finally, in the Nordic Center there will be projects that seek to demonstrate how a holistic view of payment data can be used to “detect illegal activities,” such as money laundering, tax evasion, and terrorist financing.
Another of them, he specifies, will investigate the demands for security and resilience “and solutions that allow CBDCs to be used offline.”
BIS has already called for regulation this year
The Bank for International Settlements has already called for the regulation of bitcoin and the rest of the ecosystem this year. A few days ago, CriptoNoticias reported the statements of Agustín Carstens, the president of the organization, who explained that digital money “should not be based on anonymity but on identification and trust”.
During his participation in a forum, the banker highlighted that “wherever private stablecoins are issued, they must be adequately regulated to deal with the risks they pose, such as runs, payment system risk and concentration of economic power.”
Thus, the BIS confirms that this year will advance in its intention to promote regulation of the decentralized market, while seeking to encourage the development of digital money supported by the trust that is supposed to emanate from the Central Banks.