This month, the Bank for International Settlements (BIS) published papers on supervisory practices for assessing sustainability of bank business models, business continuity planning at central banks, and certain aspects of central bank digital currencies (CBDC). The BIS Innovation Hub and Bank Indonesia also announced a G20 TechSprint with a view to developing new solutions for CBDCs.
The key highlights of the aforementioned publications follow:
- The Financial Stability Institute (FSI) of BIS published a paper that examines the supervisory practices for assessing the sustainability of the business models of banks. Through this, the paper aims to identify practices that might be relevant to authorities seeking to explicitly introduce business model analysis in their supervisory review process. To this end, the paper emphasizes practical aspects of business model analysis, including processes and procedures for developing and conducting a such an analysis and for integrating the outcomes into the overall supervisory review process. It also notes that granular and good-quality data, adequate data aggregation capabilities, and expert judgment are indispensable elements of an effective business model analysis framework. The paper concludes that business model analysis has the potential to enhance bank supervision and make it more effective, proactive, and forward-looking.
- The report on business continuity planning focuses on how business continuity planning at BIS member central banks in the Americas has changed since the beginning of the COVID-19 pandemic. This report is published by the Consultative Group on Risk Management established at the BIS Representative Office for the Americas. The report notes that, following the eruption of the pandemic, organizations have identified, or are in the process of identifying, key actions that will allow them to strengthen their operational continuity strategies and incorporate mechanisms to develop their operational resilience holistically.
- With respect to the CBDCs, FSI published a paper that examines CBDC as a tool to promote financial inclusion while BIS published a set of working papers that examine the work being being done by the emerging market economy central banks with respect to the CBDCs. Finally, the BIS Innovation Hub and Bank Indonesia launched the third G20 TechSprint Initiative as one of the side events of Indonesia's G20 Presidency, focusing on developing new solutions for CBDCs. The three problem statements for the TechSprint involve enabling financial inclusion, improving interoperability of payment systems, and building effective and robust means to issue, distribute, and transfer CBDCs. The shortlisted teams will showcase their prototypes in July 2022 and and independent panel will announce winners in October 2022.
- Paper on Sustainability of Bank Business Models
- Report on Business Continuity Planning
- Paper on CBDC as Financial Inclusion Tool
- Papers on CBDC Work in Emerging Markets
- G20 TechSprint on CBDCs
Keywords: International, Banking, Business Continuity, CBDC, Financial Inclusion, Financial Stability, TechSprint, G20, Business Models, Banking Supervision, Regtech, Suptech, Operational Resilience, Operational Risk, Basel, PMI, FSI, BIS
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