Featured Product

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    March 04, 2021

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community. The paper leverages on a survey conducted in 2020 with responses from 52 central banks worldwide. The paper examines how central banks define and use big data, as well as which opportunities and challenges they see. Institutions use big data and machine learning for economic research, in the areas of financial stability and monetary policy, as well as for suptech and regtech applications. Data quality, sampling, and representativeness are major challenges for central banks and so is legal uncertainty around data privacy and confidentiality. The paper notes that cooperation among public authorities could improve central banks’ ability to collect, store, and analyze big data.

    Among other challenges, several institutions report constraints in setting up an adequate IT infrastructure and in developing the necessary human capital. Overall, the analysis highlights that central banks define big data in an encompassing way that includes unstructured non-traditional as well as structured data sets. Central banks' interest in big data and machine learning has markedly increased over the last years. In 2020, over 80% of central banks report that they use big data, up from just 30% five years ago. Among the institutions that currently use big data, over 70% use it for economic research, while 40% state that they use it to inform policy decisions. These numbers suggest that big data and machine learning offer many useful applications and can help central banks in fulfilling their mandate. The vast majority of central banks are now conducting projects that involve big data and the central banks are willing to join forces to reap the benefits of big data. Indeed, half of them reported an interest in collaborating in one or more specific project, with three types of cooperation envisaged:

    • By sharing knowledge among those institutions that have developed specific expertise that can be reused in other jurisdictions. These expertise include general big data techniques (for example, data visualization, network analysis, machine learning tools), more general information management issues (for example, development of open-source coding, data-sharing protocols, encryption and anonymization techniques for using confidential data) as well as specific applications that are more devoted to the central bank community (for example, suptech and regtech areas).
    • By using big data to work on global issues such as international spillovers, global value chains, and cross-border payments.
    • By developing joint exploratory projects to benefit from economies of scale and collectively share (limited) financial and human resources. 

    International financial institutions can greatly support these cooperative approaches. They can facilitate innovation by promoting technological solutions to harmonize data standards and processes among jurisdictions. With this spirit, the BIS Innovation Hub has been established to identify and develop insights into critical trends in financial technology of relevance to central banks, explore the development of public goods to enhance the functioning of the global financial system, and serve as a focal point for a network of central bank experts on innovation. Such a network could undoubtedly play an important role in facilitating international cooperation to exploit big data sources and techniques.

     

    Related Links

    Keywords: International, Banking, Big Data, Regtech, Suptech, Machine Learning, BIS

    Related Articles
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6826