Hi Suptech Community,
Welcome to the Cambridge SupTech Lab bi-weekly LinkedIn newsletter, a source for updates on recent innovations, breakthroughs, opportunities, and upcoming events in the field of suptech, as well as 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 also connect with our global community of supervisors, data scientists, vendors and suptech experts via email to share event invites, news or new courses – subscribe here.
Highlighted
- The March 2023 banking turmoil was the most significant system-wide banking stress since the Great Financial Crisis in terms of its scale and scope, says Basel Committee. The bank failures, while having largely distinct causes, triggered a broader crisis of confidence in the resilience of banks, banking systems and financial markets across multiple jurisdictions. In response, wide-scale public support measures were deployed by some jurisdictions to mitigate the impact of the stress. Against that backdrop, the Committee undertook a stocktake of the regulatory and supervisory implications of the turmoil in a timely and thorough manner, with a view to learning lessons. Read more here.
Suptech Innovations
- Project Mandala aiming to streamline cross-border transactions with real-time monitoring. This new initiative by the Bank of International Settlement (BIS), in collaboration with five financial authorities, seeks to ease the policy and regulatory compliance burden by automating compliance procedures, providing real-time transaction monitoring and increasing transparency and visibility around country-specific policies. Read more here.
- Deutsche Bundesbank’s “AI Knowledge Assistant.” The Central Bank of Germany is currently testing a knowledge assistant product that is based on OpenAI technology. This suptech solution allows analysts to search huge sources of text for specific information in a matter of seconds. The assistant specialises in questions from the world of central banking and always provides its answers with references and sources. Read more here.
Research Spotlight
- The Bank for International Settlements (BIS) and the central banks of France, Singapore and Switzerland have successfully concluded Project Mariana. The project tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions, using new decentralised finance (DeFi) technology concepts on a public blockchain. Read more here.
- Top global banks’ Basel III capital ratios increased above pre-pandemic levels in the second half of 2022, recent Basel III monitoring exercise reveals. According to the most recent Basel III report, initial Basel III capital ratios increased above pre-pandemic levels in the second half of 2022 and liquidity coverage ratios declined but remained above pre-pandemic levels. The leverage ratio further increased on average, driven by Europe and the Americas, after showing an overall decrease during the pandemic period. Read more here.
- The International Monetary Fund (IMF) constructs financial stress index (FSI). The IMF has employed text analysis to construct a continuous financial stress index for 110 countries, which could unlock new insights into the process of booms and busts. The index relies on a computer algorithm along with human expert oversight and is thus easy to update. The authors mention that this new indicator picks up financial crises earlier than some other approaches and contains richer information on both the duration and severity of stress. Read more here.
Industry News
Network for Greening the Financial System (NGFS) launches framework on nature-related risks. The NGFS has released a conceptual framework to enable central banks and supervisors to tackle nature-related financial risks. The guide focuses on defining nature-related risks, identifying sources of physical and transition risk, and bridging modelling and data gaps. Read more here.
Bank of England (BoE) delays date for banks’ Basel III compliance. The Bank of England will postpone the implementation of Basel III capital rules by United Kingdom (UK) lenders by six months. Banks in the UK will now have July 1, 2025 as their implementation date for the reforms. It is also reducing the transitional period to four and a half years, so the reforms will be fully implemented by January 1, 2030. Read more here.
Central Bank of UAE (CBUAE) launches a new instant payment system. The CBUAE, via its subsidiary Al Etihad Payments, has launched Aani, a 24/7 instant payments system designed to transform the landscape of digital payments in the country. Aani gives customers the ability to split bills and transfer money using just phone numbers, while also enabling businesses to accept payments using QR codes. Read more here.
CPMI pushes for harmonized payments data. The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) has published harmonised ISO 20022 data requirements that establish a consistent minimum set of messaging standards for more efficient processing of cross-border payments. The data requirements, a key element of the G20 cross-border payments programme, were developed with the private sector Payments Market Practice Group (PMPG). Read more here.
SQL Power and CoreFiling team up to deliver enhanced supervisory (SupTech) solution for Europe. SQL Power, an authority in Financial Regulation, Digital Transformation, and Advanced Analytics, declared its recent collaboration with CoreFiling. The SQL Power Suite, the only configurable XBRL-based online data collection and case management platform in the World, will leverage CoreFiling’s flagship XBRL Processing Engine, the True North Data Platform (TNDP) as well as their broad and deep expertise in EU Taxonomies to offer real-time cell-by-cell online validation of all financial submissions. Read more here.
Opportunities
European commission tenders for project to assess the environmental impact of crypto-assets. The Commission’s financial services directorate has put out a tender for a model-based approach to mitigating the environmental impact of crypto-assets. The Commission is concerned about the negative environmental impact caused by excessive power consumption generated by the crypto industry. The deadline for receipt of tenders or requests to participate is 10th November 2023. Read more here.
Financial Stability Board (FSB) proposes a set of resolution-specific resources and tools to support the resolution of a central counterparty (CCP). The FSB has laid out a global standard to govern how authorities prepare to resolve central counterparties (CCPs) whenever they fail. Under the proposed framework, authorities must be able to deploy a range of tools and tap into various resource pools if a CCP fails. The FSB invites comments on the report and accompanying questions by 20th November 2023. Read more here.
Basel Committee consults on disclosure of banks’ cryptoasset exposures. The Committee published a consultative document on 17th October 2023 to follow on from its prudential standard on the treatment of cryptoasset exposures, finalised in December 2022. The document proposes a standardised disclosure table and set of templates for banks’ cryptoasset exposures with a proposed implementation date of 1 January 2025. The Committee welcomes comments from the public and market participants, including the users and preparers of disclosures, on all aspects of the consultative document, by 31 January 2024. Read more here.
Capacity Building & Education
Leading Transformation: Product and Organizational Innovation program. Cambridge SupTech Lab at the Cambridge Centre for Alternative Finance (CCAF) will be running the asynchronous 6-week online program from 6 November to 15 December 2023. Designed for leaders within regulatory, supervisory and policy making authorities, the program focuses on furthering visionary and effective leadership through diving into techniques for data-driven and user centered solutions design, change management, and products and organisational innovation. The program supports development of a project charter detailing scope, technical analysis and implementation plans for taking a proof of concept of a cutting-edge suptech through agile prototyping and deployment. Read more and register here.
The Toronto Centre core curriculum program. Toronto Centre will be running a two-week course on financial regulation and supervision from 30th October to 10th November 2023 in Toronto, Canada. Designed for mid- to senior-level staff and managers involved in regulatory and supervisory activities, the program will cover several topics including risk-based supervision, conduct risks supervision, climate and biodiversity loss risks, insurance supervision, among others. Read more and register here.
In case you missed it…
Data Science in central banking: applications and tools. The Irving Fisher Committee on Central Bank Statistics (IFC) periodically organises workshops on “Data science in central banking” with a diverse audience of practitioners and technicians. The most recent one took place in 2022 and focused on the broad spectrum of data science applications and tools used in central banks. Read more here.
The Global State of Financial Inclusion and Consumer Protection (FICP), 2022. This publication, which is an update to the 2013 and 2017 iterations of the Global FICP Survey report, details the key findings and provides a source of global data to benchmark efforts by financial sector authorities to improve the enabling environment for financial inclusion and consumer protection. Read more here.
Upcoming Events
Regnology’s RegTech convention 2023. Happening between 21st and 22nd November 2023, this conference covers regulatory services innovation. It will bring together regulators, supervisory authorities, regulated entities and key industry stakeholders to network and share knowledge around new technologies and practices that support better regulations. Cambridge Suptech Lab’s Co-Head, Simone di Castri, will be sharing insights on suptech use cases at the suptech conference panel discussion happening on the second day. Read more here.
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