ECB Creates Innovation Hub to Focus on Fintech Research
- The initial target of the new entity will be to understand exactly how technology is affecting central banks.
- Benoit Coeure is one of the leading voices when it comes to concerns over the impact of technology on financial services as they stand.
The European Central Bank emblem located in downtown near the financial district in Frankfurt am Main, Germany on February 15 2020. Goran Vrhovac/Shutterstock
The Bank of International Settlements (BIS) is forming a new unit that will aim at understanding the impact of financial technology including digital currencies. As announced on Monday, the lead of this new entity will be the executive board member of the European Central Bank (ECB) – Benoit Coeure.
The Bank of International Settlements, which is located in Basel, Switzerland, is also regarded as the central bank of central banks. BIS’s ownership is split between 60 central banks like the U.S. Federal Reserve, the People’s Bank of China and the ECB.
This “Innovation Hub” was established as part of BIS earlier this year. Its aim is to research how modern technology is affecting central banks globally. As huge tech enterprises like Apple and Facebook are engaging seriously into the financial sphere, this effort is more than logical for regulators worldwide.
As Coeure mentioned in the Monday press release:
“I look forward to bringing my expertise to the global central banking community at this time of rapid technological change…We must make the best use of innovation to support financial stability and promote financial inclusion.”
Coeure was part of ECB’s executive board for 7 years and was responsible for the oversight of payment systems and market infrastructure. Over the years he had a strong opinion on how the global payments infrastructure is shaped by technology and also led the “Group of Seven” taskforce.
As part of a speech in September, the French economist commented on Facebook’s Libra as a “wake-up call” for central banks globally.
He added:
“The demand for fast, reliable and cheap cross-border payments is bound to grow further in coming years… Policymakers and central banks should respond to these challenges.”
Libra is receiving a lot of criticism from regulators and lawmakers around the world because of the possible money laundering and terrorism financing risks that can stem from it. A number of European Union officials want to block the launch of Libra as it could destabilize sovereign currencies.
However, the official goal of the Libra Association and Facebook is to grant a smooth and accessible method for payments to people around the world.
Coeure will step into his new role on January 15, 2020, since his term at the ECB comes to an end on December 31st this year.
- The second phase of Project Helvetia was conducted in partnership with the Bank of International Settlements, the Swiss National Bank, and the SIX Digital Exchange.
- Completed in the fourth quarter of 2021, the tests saw a wholesale CBDC being integrated into the systems of Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg, and UBS banks.
Bern, Switzerland – April 15, 2019: Decorative inscription on the Swiss National Bank.
marekusz / Shutterstock
- The European Central Bank also wants stablecoin issuers to meet the same “rigorous liquidity requirements” as banks.
- The central bank has urged the EU to ensure its ruling be made binding on all national authorities in the Euro Zone.
- CBDC research and testing is high on the BIS Innovation Hub’s agenda list for 2021, including a new platform for testing CBDCs.
- The BIS also announced its new “innovation Network”, which will see its 63 members share knowledge about CBDCs.