Singapore chosen by Bank for International Settlements for innovation hub centre

The Bank for International Settlements said on June 30, 2019, that the role of the hub will be to identify and develop in-depth insights into critical trends in technology affecting central banking. ST PHOTO: KUA CHEE SIONG

SINGAPORE - The Bank for International Settlements (BIS), dubbed the central bank for the world's central banks, will establish an innovation hub centre in Singapore in a move that Singapore's central bank said reflects the Republic's position as a leading international fintech centre.

BIS' Innovation Hub will span multiple locations. It will first set up centres in Basel, Switzerland, and Hong Kong, making use of existing BIS facilities there. Singapore will host its third hub centre, also as part of the plan's first phase.

Announcing this on Sunday (June 30), BIS said the role of the hub will be to identify and develop in-depth insights into critical trends in technology affecting central banking.

It will also develop public goods in the technology space geared towards improving the functioning of the global financial system and serve as a focal point for a network of central bank experts on innovation.

The move is the latest of recent fintech developments here. On Friday, Senior Minister Tharman Shanmugaratnam announced Singapore will issue up to five new digital bank licences, paving the way for non-bank players to break into the local financial service scene.

Global professional services firm EY reported last week that the fintech adoption rate among Singaporean consumers jumped from 23 per cent to 67 per cent in just the last two years, higher than the global average of 64 per cent.

Noting that the IT revolution has no borders, chairman of the BIS board of directors Jens Weidmann said: "The establishment of the BIS innovation hub will enable central banks to extend their existing collaboration with a view to identifying relevant trends in technology, supporting these developments where this is consistent with their mandate, and keeping abreast of regulatory requirements with the objective of safeguarding financial stability.

"There are significant economies of scale in such an endeavour, and the BIS is the ideal vehicle to realise them."

Mr Mark Carney, chair of the BIS economic consultative committee, added: "There is a new economy emerging driven by changes in technology, demographics and the environment.

"While the private sector is driving these innovations, their efforts will be more effective if the hard and soft infrastructure of the global financial system support this innovation, promote resilience and level the playing field on which to compete.

The Monetary Authority of Singapore (MAS), in welcoming the setting up of a hub centre in Singapore, said this "reflects Singapore's position as a leading international fintech centre, with an advanced fintech ecosystem".

"In collaboration with other central banks, the Singapore hub centre aims to develop the technology architecture for an efficient and secure digital global financial system and facilitate experiments in the application of technology to enhance financial regulation," MAS added.

The Singapore centre will start operations once institutional arrangements - including its location and staffing arrangements - have been finalised.

In a statement, MAS managing director Ravi Menon noted the wave of technological innovations sweeping across financial services.

"To fully harness the benefits of these innovations while ensuring the resilience of the financial sector, central banks must also innovate - to modernise the technology infrastructure and regulatory arrangements that underpin digital finance and the digital economy," he said.

He added: "The BIS Innovation Hub initiative provides a compelling platform for central banks to collaborate in this effort, so as to maximise the benefits of cross-border digital connectivity and commerce. MAS looks forward to working closely with the BIS and the global central banking community to advance this visionary and important agenda."

BIS, which works to promote global monetary and financial stability through international cooperation, said hub centres will be added across the Americas and Europe in the second phase of implementation.

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