The Bank for International Settlements (BIS) has announced the first six projects to be undertaken by its Innovation Hub in 2024, building on the completion of 12 projects in 2023 with eight more still ongoing. The new projects will focus on areas like cybersecurity, fighting financial crime, central bank digital currencies, and green finance.

BIS Announces Six New Projects for 2024 Focused on Emerging Financial Technologies

One project called Project Leap will work on "quantum-proofing" payment systems against potential future threats from quantum computers. Another one codenamed Project Symbiosis will use artificial intelligence and big data to improve emissions tracking in supply chains.

“After completing 12 projects in 2023, we are looking forward to another busy year ahead, in collaboration with central banks, international organizations, and other partners,” said Cecilia Skingsley, the Head of the BIS Innovation Hub.

Project Aurum will study privacy issues in central bank digital currency design, while Project NGFS Data Directory 2.0 aims to upgrade the data platform of the Network for Greening the Financial System to make climate-related financial data more easy to search.

Additionally, Project Promissa will test using distributed ledger technology to tokenize promissory notes, and financial instruments used to help fund international institutions. Project Hertha plans to apply network analytics to identify financial crime patterns in real-time payment systems.

The Full List of Projects for 2024

• Project Leap (Eurosystem Centre): Phase II will aim to "quantum-proof" payment systems by showing how a payment system can be protected from the potential threat of quantum computers.
• Project Symbiosis (Hong Kong Centre): Will test using AI and big data for supply chain emissions disclosure and adaptation, focusing on Scope 3 emissions.
• Project Aurum (Hong Kong Centre): New phase studying privacy of payments in retail CBDCs, leveraging expertise from academia and privacy regulators.
• Project NGFS Data Directory 2.0 (Singapore Centre): Rebuilding the data directory platform of the Network for Greening the Financial System to make it more usable.
• Project Promissa: Testing feasibility of tokenizing paper-based promissory notes that help fund international financial institutions using distributed ledger technology.
• Project Hertha (London Centre): Testing the use of network analytics to help identify financial crime patterns in payment systems.

“Tokenization is an important area where we have already launched one project and are planning more initiatives. Safety is another crucial area. We need to find ways to improve the efficiency of services like payments, without ever compromising on security, following the principle set by the G20 countries,” Skingsley added.

BIS highlighted that its Innovation Hub has carried out almost 30 projects across various emerging areas of technology relevant to central banking over the past four years. However, it emphasized that the experimental nature of the projects aims to investigate the feasibility of different applications rather than endorse specific technologies.

FX Derivatives and Crypto through the Eyes of BIS

In July, BIS told the Group of Twenty that cryptocurrencies cannot be adopted as a monetary instrument due to "inherent structural flaws." A few months later, in October, global banking regulators, including the Bank, took a step towards increasing transparency by introducing a Basel Committee proposal to enforce standardized crypto asset disclosure by major banks starting in January 2025.

Growth in complex financial instruments continued as well. In November, BIS reported surging over-the-counter (OTC) derivatives volumes resulting from interest rate fluctuations and the phasing out of LIBOR benchmark rates. Specifically, OTC interest rate derivatives rose 17% and FX derivatives climbed.

Also in November, BIS launched a new Data Portal to improve the availability and accessibility of international banking statistics and other financial indicators, marking a major advancement for financial data.

BIS has clearly been active on multiple fronts in shaping policies and infrastructure for the evolving global financial system. From critiquing cryptocurrencies to pushing transparency reforms and monitoring complex securities, BIS continues promoting stability and soundness.