THE NEXT-GENERATION Building a Digital Central Bankfor a Digital Age

Central banks’ key functions have remained largely unaltered since the first was established in the mid-17th century. These include: setting monetary and financial policy; acting as lenders of last resort; ensuring the stability of the financial system; and supervising the financial industry.

The pace of digitally driven change across the Financial Service Industry (FSI) has triggered central banks and regulators* to review their approach in supervisory and policymaking.

This series of articles will show that the time for digital central banks has arrived. This paper will demonstrate that the time for the digital central bank is now.

The fact is that central banks are not immune from the changes brought by digitisation. Those changes
fall into four main areas:

1. New entrants such as fintechs that have permanently altered the financial services’ (FS) landscape;
2. New technology such as blockchain, artificial intelligence, cloud, quantum computing and analytics – much of which lacks definitive market standards; Heightened and changed customer demands and expectations;
3. The growing sophistication of security threats, the volatility of global economy that comes with the increased volume of regulations, compliance etc. to ensure financial and economic stability.

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