Chris Skinner’s Post

Things worth reading: 1st November 2024 - Things we're reading today include ... Banks’ use of AI could be included in stress tests, says Bank of England deputy governor World’s Safest Banks 2024: World’s Biggest Banks

Central banks urgently need to “raise their game” to tackle the challenges and opportunities of artificial intelligence, as it transforms economies and the financial system, according to a new report. The report adds that awareness of global financial authorities that they need to keep pace with the wave of innovation being released by generative AI. Read more https://lnkd.in/e2k-krEB #AI #banking

𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗠𝗼𝗻𝗲𝘆 𝗖𝗵𝗮𝗻𝗴𝗲𝘀 𝘁𝗵𝗲 𝗡𝗮𝘁𝘂𝗿𝗲 𝗼𝗳 𝗠𝗼𝗻𝗲𝘆 - 𝗝𝗼𝗻𝗻𝘆 𝗙𝗿𝘆 | 𝗧𝗮𝗹𝗸𝗶𝗻𝗴 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝘄𝗶𝘁𝗵 Michael Wilson & David Buik Join Jonny Fry, renowned for his research on blockchain and digital assets, in the Capital.com studio for Talking Markets. Recent discussions with finance experts have focused on the evolution and impact of digital payments and blockchain technology: 💡 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗖𝘂𝗿𝗿𝗲𝗻𝗰𝗶𝗲𝘀 𝗮𝗻𝗱 𝗕𝗹𝗼𝗰𝗸𝗰𝗵𝗮𝗶𝗻 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻𝘀 The conversation covered Central Bank Digital Currencies (CBDCs), stablecoins tied to fiat currencies like the US dollar, and tokenized assets leveraging blockchain technology. Jonny Fry highlighted CBDCs, noting that 91% of central banks are exploring these programmable currencies for enhanced financial inclusivity and efficiency. Meanwhile, stablecoins aim to stabilize market volatility, though concerns about regulatory oversight persist. Blockchain's influence extends into asset management, with firms like BlackRock tokenizing funds for 24/7 trading, enhancing market liquidity and accessibility. 🔍 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 & 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗜𝗺𝗽𝗮𝗰𝘁𝘀 The discussion emphasized regulatory complexities such as the UK Proceeds of Crime Act, impacting digital asset users' rights and legal protections. Despite challenges, McKinsey projects significant growth in the global digital asset market, expecting revenues to reach $3.2 trillion annually by 2027. This growth is driven by digitalization in sectors like e-commerce and international trade, benefiting from reduced transaction costs and improved trade efficiency. 💻 𝗗𝗮𝘁𝗮, 𝗔𝗜, & 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 Jonny highlighted the pivotal role of data in banking, enabling AI-driven analysis for personalized financial services and risk management. AI-powered analytics optimize operational efficiencies and enhance fraud detection, positioning banks to leverage consumer data insights effectively. 🌍 𝗚𝗹𝗼𝗯𝗮𝗹 𝗔𝗱𝗼𝗽𝘁𝗶𝗼𝗻 & 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗙𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸𝘀 David Buik stressed the importance of balanced regulatory frameworks that promote innovation while safeguarding consumer interests. Trust and regulatory compliance are critical for the widespread adoption of digital financial services globally. 🚀 𝗙𝘂𝘁𝘂𝗿𝗲 𝗢𝘂𝘁𝗹𝗼𝗼𝗸 & 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻 Looking ahead, the digital currency and blockchain landscape promises secure, transparent, and efficient transactions, prioritizing user convenience. Continued dialogue and education are crucial for advancing regulatory frameworks alongside technological progress. Navigating regulatory landscapes and ensuring cybersecurity are essential to unlocking their full potential. Watch here: https://lnkd.in/enUhmmxm For more weekly insight and thought-provoking analysis, get your copy at https://lnkd.in/ev-WMFzG #Blockchain #CBDCs #Stablecoins #FinancialInnovation #DigitalPayments #AssetManagement #ArtificialIntelligence

Central banks urgently need to “raise their game” to tackle the challenges and opportunities of artificial intelligence, as it transforms economies and the financial system, according to the Bank for International Settlements. The BIS conclusions, outlined in a report released on Tuesday, underline the awareness of global financial authorities that they need to keep pace with the wave of innovation being released by generative AI, including large language models such as ChatGPT. The organisation, which operates banking services for the world’s central banks, has carried out several experiments using the technology. It said AI was likely to be “a game changer for many activities and have a profound impact” on the broader economy and financial system. “There is an urgent need for central banks to raise their game,” it added. “Recent evidence suggests that AI directly raises productivity in tasks that require cognitive skills,” the BIS said. It cited a study by China’s financial technology giant Ant Group, which found its programmers were 55 per cent more productive when using a LLM to help with coding." "The Financial Times revealed recently that the European Central Bank had started using AI to speed up many of its more mundane activities, from drafting briefings and summarising banking data to writing software code and translating documents."

This week’s roundup zooms back on several #ai with ASIC’s warning regarding the robustness of licensed entities’ governance frameworks for managing AI, Hong Kong’s policy statement on the responsible use of AI in financial services and a new Bank of Japan study on generate AI adoption among financial institutions,shares highlights from the BIS project Mandala on automated compliance for #crossborderpayments and the HKMA’s new partnerships with the central banks of Brazil and Thailand for cross-border #tokenization experiments under Project Ensemble, and outlines SEBI’s latest proposed regulatory reforms for #esg rating providers. Explore all updates under the link below.

Central Banks Use AI To Assess Climate-Related Risks Central bankers said on 19 March they have broken new ground by using artificial intelligence to collect data for assessing climate-related financial risks, just as the volume of disclosures from banks and other companies is set to rise. The Bank for International Settlements, a forum for central banks, the Bank of Spain, Germany's Bundesbank and the European Central Bank said their experimental Gaia AI project was used to analyse company disclosures on carbon emissions, green bond issuance and voluntary net-zero commitments. Gaia was able to overcome differences in definitions and disclosure frameworks across jurisdictions to offer much-needed transparency, and make it easier to compare indicators on climate-related financial risks, the central banks said in a joint statement. #gaia #ai #finance #tech #climaterisk https://lnkd.in/g-jzzNU4

🍑 I like big banks, and I cannot lie. Said no one ever. Except, despite how easy it is to villainize the men with golden toilets, that's still our money. So when they hit a speedbump, we're going to feel it. That's why Christos Makridis is working to create a system that can help banks manage risk more effectively, and give them the tools to stay ahead of the innovations curve rather than simply react to new regulations. https://lnkd.in/ePYnBYCJ

The global financial system is on the brink of a revolutionary transformation, with opportunities that surpass the shifts seen in 2008. Key fintech trends like Central Bank digital currencies are set to redefine traditional banking. This change mirrors the historic moments of innovation, where old systems gave way to the new. Countries like China are leading the way, piloting digital currencies and setting an exciting precedent for the future. Decentralised Finance is emerging as a powerful force, not as a threat, but as a tool to democratise finance and empower individuals globally. Nations like Estonia and Switzerland are embracing this disruptive technology, creating forward-thinking regulatory frameworks that pave the way for a more inclusive financial landscape. Quantum Computing, often seen as the next giant leap, holds the potential to revolutionise our financial systems. With its ability to solve complex problems in seconds, it's driving us toward a future where security and efficiency reach unprecedented levels. The United States and China are at the forefront of investing in this incredible frontier. We stand on the cusp of a bright new era. The choice is clear: we can harness these innovations to build a stronger, more resilient financial system, or we can let fear and doubts hold us back. The future isn’t about clinging to the past systems and methodologies but about embracing the exciting possibilities ahead. As Winston Churchill wisely noted, "Those who fail to learn from history are condemned to repeat it." Let's learn, adapt, and thrive. Explore these key fintech trends, create new value, and be part of the future: https://lnkd.in/ghTDPkz9.

CBDC is reality.. learn more predictions for 2024 from our Horacio Barakat, Head of Digital Innovation for Capital Markets.

Bank for International Settlements – BIS - Artificial intelligence and big holdings data: opportunities for central banks Source: https://lnkd.in/g6AaUyhy #ai #big #data #opportunities #overview #central #bank Credits: Xavier Gabaix Ralph Koijen Robert Richmond Motohiro Yogo Highlights: Modern central banks use a rich set of policy tools to achieve their policy objectives. In this short nontechnical companion article to our main conference paper (Gabaix et al. (2024)), we explain how a quantitatively realistic model of the asset demand system is essential to assess ex post, and predict ex ante, how policy interventions impact asset prices, the distribution of wealth across households and institutions, and financial stability. Asset demand systems specify the demand of investors for financial assets and the supply of securities by firms. By combining the model of the asset demand system with the market clearing condition, we obtain a model of asset prices. Due to the improved availability of big holdings data and advances in modeling techniques, estimating asset demand systems is now a practical reality. We show how demand systems provide improved information for policy decisions (e.g., in the context of financial contagion, convenience yield or the strength of the dollar) or to design optimal policies (e.g., in the context of quantitative easing or designing climate stress tests). We discuss how recent AI methods can be used to improve models of the asset demand system by better measuring asset and investor similarity through so-called embeddings. These embeddings can for instance be used for policy making by central banks to understand the rebalancing channel of asset purchase programs and to measure crowded trades.