Hi SupTech Community,
Welcome to the 21st issue of the Cambridge SupTech Lab bi-weekly LinkedIn newsletter, a source for updates on recent innovations, breakthroughs, opportunities, upcoming events in the suptech field, and news from the Cambridge SupTech Lab team.
If you would like to flag any items for inclusion in the next newsletter, please email us at cambridgesuptechlab@jbs.cam.ac.uk. Occasionally, we email our global community of supervisors, data scientists, vendors, and suptech experts to share event invites, news, or new courses—subscribe here.
This edition includes news from the Bank for International Settlements (BIS), Bangko Sentral ng Pilipinas , Monetary Authority of Singapore (MAS), Toronto Centre, Bank of England, European Central Bank , Financial Stability Board (FSB), Bank of Israel, Network for Greening the Financial System (NGFS) and others.
Suptech Innovations
Bangko Sentral ng Pilipinas (BSP) enhances BSP-supervised financial institutions (BSFIs) crimes and losses reporting. The BSP has improved further the electronic submission of the report on crimes and losses (RCL) of all BSFIs via the advanced suptech engine for risk-based compliance (ASTERisC*). The enhancement in the revised RCL template includes additional fields and changes in the available dropdowns for cyber-related crimes to align with RCL submission via ASTERisC* and the expansion of the template to a nine-digit financial code in accordance with the enhanced financial institution library system of the BSP. BSFIs submitting RCL will use the revised RCL data entry template by August 5th, 2024. Read more here.
Bank of England (BoE) and the Bank for International Settlements (BIS) Innovation Hub develop prototype to monitor stablecoin balance sheets. The BIS Innovation Hub has published a report on Project Pyxtrial, a technology solution first announced in February last year as an effort to prevent asset-liability mismatches on stablecoins. The report said that Pyxtrial has developed a prototype data analytics pipeline which includes data collection, storage and analysis. Adopting Pyxtrial can support supervisors in receiving more frequent and fully automated reports. Successfully deploying Pyxtrial requires that regulators use a multidisciplinary team to implement and operate it. Read more here.
Central Banking & Technology
Monetary Authority of Singapore (MAS) commits up to S$100 million to support quantum and artificial intelligence (AI) capabilities in the financial sector. The funds are an additional amount that will come under the Financial Sector Technology and Innovation grant scheme, or FSTI 3.0. The MAS will establish a Quantum track under FSTI 3.0, with 3 grants, to support financial institutions’ interests in building quantum capabilities in Singapore. The authority will also enhance the existing AI and data grant scheme under FSTI 3.0 to bolster financial institutions’ development and deployment of AI technologies in Singapore and to develop AI platforms to address industry-wide use cases. Read more here.
Bank of Israel selects 14 teams to participate in digital shekel challenge. The challenge, inspired by “Project Rosalind” carried out by the BIS Innovation Hub, seeks to examine the possibility of issuing a central bank digital currency (CBDC), or digital shekel. The selected use cases deal with a variety of fields: connectivity between the digital shekel, other payment systems, and cash; use of the advanced functionalities offered by the digital shekel, such as subwallets, conditional payments, and split payments; and the implementation of various technologies while using the digital shekel as a means of payment. Read more here.
Blockchain intelligence company, Crystal, to provide blockchain data for the European Central Bank (ECB). Crystal has recently announced this strategic partnership with the ECB, a collaboration that aims to leverage Crystal’s comprehensive blockchain data to enhance financial oversight and stability in the eurozone. This data will enable the ECB to develop advanced statistical analyses. This is particularly relevant as new regulations for crypto-assets come into play. Read more here.
European Supervisory Authorities (ESAs) establish framework to strengthen coordination in case of systemic cyber incidents. The three ESAs – European Banking Authority (EBA), European Insurance & Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) – are working together to establish the EU systemic cyber incident coordination framework (EU-SCICF), in the context of the Digital Operational Resilience Act (DORA), that will facilitate an effective financial sector response to a cyber incident that poses a risk to financial stability, by strengthening the coordination among financial authorities and other relevant bodies in the European Union (EU), as well as with key actors at international level. Read more here.
Palau to build blockchain platform for government bonds. The Pacific Island nation of Palau has entered into an agreement with Japanese fintech company Soramitsu, which co-developed Cambodia’s digital currency, to create a blockchain platform for issuing, managing and operating government bonds. Testing of the blockchain solution will begin in the current fiscal year, with a full launch scheduled for 2025. The project is receiving aid from the Japanese Ministry of Economy, Trade and Industry, and the Japanese foreign and finance ministries will advise on project management. Read more here.
ESAs consult on guidelines under the markets in crypto-assets regulation. The three ESAs have published a consultation paper on Guidelines under Markets in Crypto-assets Regulation (MiCAR), establishing templates for explanations and legal opinions regarding the classification of crypto-assets along with a standardised test to foster a common approach to classification. MiCAR establishes regimes for regulating the issuance, offering to the public, and admission to trading of electronic money tokens (EMTs), asset-referenced tokens (ARTs), and other crypto-assets. The deadline for the submission of comments on the paper is 12th October 2024. Read more here.
China and Kazakhstan set to carry out joint CBDC research. The People’s Bank of China (PBoC) and the National Bank of Kazakhstan have signed a memorandum to co-operate on the research of CBDC. The two central banks have agreed to share knowledge and expertise, carry out CBDC research and develop employee competencies through joint training. Both countries recognize the transformative potential of CBDCs in enhancing financial inclusion and streamlining cross-border transactions. Read more here.
Thailand launches digital wallet registration program. Anticipated to draw participation from over 1.6 million shops, citizen registration of the digital wallet has already begun, with merchant registration set to open on October 1. This initiative, managed by the Ministry of Finance, will distribute 10,000 baht in digital currency to 50 million Thai citizens aged 16 and older. The government anticipates that the digital wallet scheme will stimulate economic growth in the fourth quarter of the year. Read more here.
Hong Kong Monetary Authority (HKMA) receives broad support for stablecoin legislation. The Financial Services and the Treasury Bureau (FSTB) and the HKMA jointly have issued the consultation conclusions on the legislative proposal to implement a regulatory regime for fiat-referenced stablecoin (FRS) issuers in Hong Kong. During the two-month public consultation period completed in February this year, 108 submissions from respondents were received. A vast majority of them agreed that with the increased prevalence and evolving development of virtual assets (VAs), a regulatory regime should be introduced for FRS issuers, with a view to facilitating proper management of the potential monetary and financial stability risks, as well as providing transparent and suitable guardrails. Read more here.
Basel Committee publishes final disclosure framework for banks’ crypto asset exposures and targeted amendments to its crypto asset standard. The final disclosure framework includes a set of standardised tables and templates covering banks’ crypto asset exposures that require banks to disclose qualitative information on their crypto asset-related activities and quantitative information on the capital and liquidity requirements for their crypto asset exposures. The targeted amendments to the cryptoasset prudential standard aim to tighten the criteria for certain stablecoins to receive a preferential regulatory treatment. Both standards have an implementation date of 1 January 2026. Read more here.
Bank of England (BoE) seeks private sector input on money and payment innovation. The central bank has published a discussion paper that sets out its response to rapid innovations in payments and their impact on monetary and financial stability. The proposed approaches consider financial stability risk appetite for wholesale settlement in central bank money, exploration of innovations in wholesale central bank money, outcomes in the retail payments landscape that deliver trust and confidence in money and engaging with international partners to consider how the respective payments landscapes can interoperate. The BoE seeks input from stakeholders on both the overall approach proposed in this discussion paper, as well as a specific number of areas to be submitted by 31st October 2024. Read more here.
Financial Stability Board (FSB) consults on recommendations related to data flows and regulation and supervision in cross-border payments. The FSB has proposed recommendations to address frictions in data flows related to cross-border payments and to promote a level playing field between bank and non-bank providers of payment services. Proposals include the establishment of a forum for cross-sectoral collaboration on data issues related to cross-border payments to ensure that the recommendations are taken forward in a coordinated manner. The FSB is inviting comments on these proposals to be submitted by 9th September 2024. Read more here.
Australian Securities and Investments Commission (ASIC) seeks input on rules to promote competitive outcomes in cash equity clearing and settlement services provided by the ASX Group. The consultation seeks feedback on ASIC’s proposals to: implement the 2017 Council of Financial Regulators Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia (Regulatory Expectations) as enforceable obligations; and impose additional requirements in several key areas, including technical interoperability, management of intragroup conflicts of interest, and external assurances on pricing and barriers to competition. Read more here.
ECB consults on governance and risk culture. The ECB is inviting comments from banks and other stakeholders on draft guide on governance and risk culture. The guide replaces the 2016 supervisory statement, clarifies supervisory expectations and shares good practices for banks’ internal governance. Consultation ends on 16th October 2024. The ECB will subsequently publish the comments received, together with a feedback statement and the final guide. Read more here.
Network for Greening the Financial System (NGFS) publishes an information note on “Improving Greenhouse Gas Emissions Data”. The note reviews some of the difficulties in measuring, estimating and collecting GHG emissions data. It then proposes several measures that could enhance the granularity and comparability of emissions data. These include harmonizing the metrics in reporting standards, encouraging coordination between supervisors and government agencies, and Intensifying collaboration across public bodies, financial institutions, and businesses. Read more here.
European Artificial Intelligence Act (AI Act) enters into force. Proposed by the Commission in April 2021 and agreed by the European Parliament and the Council in December 2023, the world’s first comprehensive regulation on artificial intelligence has come into force, aiming to foster AI development and deployment in the EU. The act introduces a uniform framework across all EU countries based on a forward-looking definition of AI and a risk-based approach. Read more here.
Datafication of sustainable finance. This paper discusses the evolution and implementation of the EU’s Sustainable Finance Strategy following the Paris Agreement, the EU Sustainable Finance Action Plan of 2018, and the EU Green Deal of 2019. It highlights the importance of a data-driven approach, digital reporting standards, the role of financial technologies (green fintech, regtech, suptech), and centralized digital reporting infrastructures to streamline data collection and ensure proportionality. Read more here.
Bank of Namibia announced as the recipient of the Transparency Award. At the 2024 Central Banking Awards, the Bank of Namibia was recognised as the recipient of the ‘Transparency Award’ in acknowledgement of its efforts of expanding the range and depth of its monetary policy communications and in improving transparency in the execution of its price stability mandate and improving transparency in the implementation of its price stability mandate. These efforts of the bank were supported by SQL Power Group. Read more here.
Generative AI (GenAI) and the potential disruption in the insurance industry. A survey conducted by Allianz to assess the impact of GenAI in the insurance industry stated that the insurance industry, being data-driven, stands to gain significantly from AI through enhanced productivity, customer service, and fraud detection. It is also stated in the survey that the fears of widespread job losses due to GenAI are blown out of proportion. Read more here.
The execution of innovation strategies has declined despite continued emphasis on innovation. A report by the Boston Consulting Group highlights that despite increased prioritization of innovation, with 83% of companies ranking it among their top three priorities, the overall readiness to execute innovation strategies has sharply declined. This paradox arises from a discrepancy between innovation and business strategies, leading to ineffective systems and “zombie” innovation efforts. To address this, the report emphasises the recalibration of innovation strategies and leveraging emerging technologies like GenAI. Read more here.
Events
Toronto Centre is collaborating with the South African Reserve Bank (SARB) to conduct a program for Sub-Saharan African (SSA) region in financial crime: Enhancing supervision to combat financial crime in an increasingly fragile world. This program aims to enhance supervisors’ supervisory skills across the SSA in combatting crime, including money laundering, financing of terrorism, market abuse, fraud, and cybercrime in financial services. It covers a range of financial crime typologies, regulatory powers, and supervisory approaches to financial crime. The program is set to take place between 22nd and 30th August, 2024. Read more here.
The MAS Academy is partnering with Toronto Centre to conduct the 18th regional leadership program for securities regulators on August 22 and August 26 – August 30, 2024. Designed for senior and upper-middle level regulators/supervisors, the program will focus on developing participants’ capability to implement change in their organisations effectively, make difficult decisions in a timely manner, and deal with stakeholders. It will use the Toronto Centre’s action planning methodology and mini case-study approach, complemented with case-studies from Asia. Read more and register here.
The Cambridge SupTech Lab’s Practical Data Science in Financial Supervision course begins on 9th September. The 6 week, online, asynchronous training programme centres on applying best practices and cutting-edge tools to achieve data-driven supervision through a series of theoretical modules and hands-on exercises. Designed for both supervisors and data scientists, the course equips participants with the skills to unlock the full potential of data science while maintaining ethical and responsible data collection, handling, and analysis using AI and other advanced technologies. To learn more about the programme, and to enrol, click here.
