BIS Innovation Hub to launch the Stablecoin Monitoring Project

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Key takeaways:

  • The bank for central banks is establishing a platform to track stablecoin balance sheets while also extending its CBDC research.
  • Of the 26 initiatives that have been active in the last few years, 15 were related to CBDCs and payment system upgrades.

The experimentation with Central Bank Digital Currencies (CBDCs) will receive more attention this year from the Bank for International Settlements (BIS), which will also start a new project to monitor stablecoins.

The so-called “bank for central banks,” with headquarters in Switzerland, declared on February 7 that, in order to enhance payment systems, its Innovation Hub would intensify its attention on CBDCs in 2023.

The bank said that “Project Pyxtrial” is a new experiment being started by the London branch of the BIS Innovation Hub to allow the systemic monitoring of stablecoins to its work agenda for the upcoming year. Pyxtrial will create a platform to track stablecoin balance sheets. 

The bank stated that the majority of central banks lack the resources necessary to “systemically manage stablecoins and avoid asset-liability mismatches,” before going on to say:

“The project will investigate various technological tools that may help supervisors and regulators to build policy frameworks based on integrated data.”

The BIS will concentrate more of its CBDC-related projects on retail CBDCs, including the two-tiered Aurum system that it tested in Hong Kong in July. It claimed that 15 of the 26 ongoing projects over the past two years had involved CBDCs and the upgrading of payment systems. The primary motivator was cited as growing awareness from central banks. They stated:

“This emphasis reflects the interests and priorities of central banks and the G20 countries’ programme to improve cross-border payments.”

A joint Rosalind experiment with the Bank of England (BOE) also intends to test out the deployment of a retail CBDC through an open API infrastructure.

Additionally, the Innovation Hub is creating real-time monitoring tools for cryptocurrencies and decentralized finance (DeFi). To overcome the absence of verified data that makes it challenging to evaluate the economic potential of these sectors, the Atlas project is an information platform.

The Multiple CBDC Bridge platform’s pilot study by the BIS was completed in September. Along with 20 commercial banks from the nations, the central banks of Hong Kong, Thailand, and the United Arab Emirates participated in the pilot.

Only 11 nations, all in the Caribbean except for Nigeria, have fully launched a CBDC. Pilot programs are being conducted in 17 countries, mainly in Asia.

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