Watch out Carney: Here’s what Japan’s central bank just said about fintech
The Bank of England made history this summer with the launch of the first ever fintech accelerator by a central bank.
But, forward-thinking Mark Carney is not the only governor eyeing the potential of the fintech sector and its future role in monetary policy making and central banking.
Haruhiko Kuroda, the governor of the Bank of Japan, has indicated it may also begin applying the technology to its own work as a central bank.
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"The Bank of Japan is ready to lead research and analysis on fintech, in view of the possibility that the Bank itself may apply fintech technologies to its operations in the future," he said.
Speaking at its first ever fintech forum, Kuroda hailed the potential for fintech to disrupt areas such as payments, settlements, investment and risk management with the development of AI technologies and blockchain among many.
"Blockchain and distributed ledger technologies, the flagship technologies in fintech, challenge the conventional concepts of ledgers kept by a trusted third party in a centralised manner," he said in a speech.
"Given that the development of financial services has been supported by ledgers as the basic infrastructure for information, the dramatic changes in how ledgers are kept may have the potential of significantly changing the structure of financial services."
He also warned of the risks of holding increasing amounts of data. "Advances in information processing underscore the importance of information security," he said also citing malicious attacks as a potential risk.
"… the development of information technology has simultaneously refined the tactics of hackers and cyber-attacks," he said, citing the attack on the Bangladesh central bank as an example.
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"Particularly in the financial industries with global networks, once such an attack occurs in one location, its negative influence may spread across the board. The Bangladesh Bank heist in the beginning of this year was the case that above-mentioned risk was materialised."
Simultaneously managing an openness of financial networks in addition to information security is "a big challenge" for fintech, he said, and had the potential to harm the public's trust in financial institutions as well as the development of the fintech sector.
The Bank of Japan opened a fintech centre earlier this year to lead research in the area, but this is the first time the bank has signalled it will implement any aspects of fintech in its own work beyond merely fostering its development.