Featured Product

    BIS Focuses on Suptech and Digital Banking, Issues Working Papers

    January 27, 2022

    The Bank for International Settlements (BIS) set out the 2022 work program for its Innovation Hub while the annual report of the Irving Fisher Committee on Central Bank Statistics (IFC) sets out progress on the key workstreams during 2021. The Basel Committee on Banking Supervision also updated the webpage on reporting instructions for global systemically important bank (G-SIB) assessment. Other recent developments include publication, by BIS, of papers on regulation of virtual banking, expected and unexpected credit losses, and small business lending.

    Key highlights of the aforementioned publications follow:

    • The work program of the BIS Innovation Hub for 2022 is focused on expanding the portfolio of explorations seeking to develop new technological public goods for central banks and on the launch of new projects in the areas of regulatory and supervisory technology, cyber security, central bank digital currencies (CBDCs), next-generation payments systems and Decentralized Finance (DeFi), sustainable finance. One of the projects in the Singapore Hub is called Project Ellipse, which builds a platform to help financial regulators to digitally extract, query, and analyze a large quantity of data from diverse sources, incorporating artificial intelligence and machine learning. The code is expected to be published as open source. In a new phase, named Project Viridis, the platform will be tested for supervision of climate-related financial risk and sustainability metrics.
    • The IFC Annual Report sets out the work done on its key workstreams in 2021. The workstreams include central banking statistics after COVID-19, big data, micro data, data governance, fintech, and sustainable finance. In 2022, IFC will further its work in these areas and a number of events will be organized in this context, with the support of the central banks of Italy, Portugal, and South Africa as well as the ECB. An important focus will be on the IFC contribution to a possible new Data Gaps Initiative (DGI) envisaged by the G20 to improve data availability and provision, especially in the areas related to environmental, fintech, and data access/sharing issues. IFC will also organize its Biennial Conference in August 2022. This will provide the statistical community with an important opportunity to analyze the post-pandemic landscape for official statistics and to shape the agenda and future priorities for central banks. 
    • BCBS recently updated the page on the information used in the G-SIB assessment. The assessment methodology for G-SIBs requires a sample of banks to report a set of indicators to national supervisory authorities. These indicators are then aggregated and used to calculate the scores of banks in the sample. Banks above a cut-off score are identified as G-SIBs and are allocated to buckets that will be used to determine their higher loss-absorbency requirement. The page that was recently provides information that the Basel Committee uses in this process.
    • The BIS paper on virtual banking highlights that the integration of technology, finance, and services is rapidly changing the banking landscape, as big techs, fintech firms, non-bank financial institutions, and incumbent banks take up stakes in virtual banking. New technology-driven models exploit the expanding data footprints of individuals and firms to generate information capital and reduce the reliance on collateral when offering loans and other financial services. Data and entities that manage data will be at the heart of this transformation. Financial regulators thus need to ensure that regulatory oversight delivers on the inclusion and intermediation-enhancing benefits of digital finance without compromising traditional regulatory goals. Also, there is a pressing need for a system of data governance that allows consumers and business to exercise control over their data through the granting and withholding of consent to the use and transfer of their data.
    • The BIS working paper on expected and unexpected credit losses uses data on the U.S. bank loans from 1985 to 2021 and finds that in a credit loss phase a prototypical business loan portfolio is more diversified than a real estate portfolio. The authors extend the model behind the Basel III requirements for credit risk to incorporate uncertainty about the credit loss phase. This lets them distinguish between two sources of potential shortfalls in loss-absorbing resources: ignoring uncertainty and the uncertainty itself. We study how the shortfall associated with each source depends on the level of diversification in a credit portfolio and propose a method to rank the level of diversification across portfolios.
    • The BIS-published paper on small business lending, which has been developed by a Federal Reserve Bank in U.S., identifies a new source of bank consolidation in the United States. For decades, both the financial and real sides of the economy have experienced considerable consolidation. The paper shows that banking-sector consolidation is, in part, a consequence of real-sector consolidation; since small banks are a disproportionate source of small-business credit, they are disproportionately exposed to shocks to small-business growth. Using a Bartik instrument based on national small-business trends and county-level industry exposure, the study shows that changes to the real-side demand for small-business credit is partially responsible for the relative decline in small banks’ deposits, income, and loan growth.


    Related Links

    Keywords: International, Banking, Fintech, CBDC, Digital Currencies, Cyber Security, Regtech, Suptech, Work Program, Sustainable Finance, G-SIB Assessment, Reporting, Lending, Credit Risk, Expected Credit Loss, Annual Report, BIS Innovation Hub, SME, Kansas FED, Digital Banking, IFC, BIS, BCBS

    Featured Experts
    Related Articles

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597