BIS developing new tool to monitor stablecoin balance sheets

The Bank for International Settlements (BIS) has announced its key areas of focus for the year, with stablecoins and central bank digital currencies (CBDCs) ranking high on its agenda.

In its announcement, the BIS confirmed that it would focus on “improving payments systems and experimenting with central bank digital currencies (CBDC).” The bank is already engaged in multiple CBDC projects with various central banks. One of these is Project Rosalind, where it partnered with the Bank of England, and a week ago, it invited applications for the next phase of the project.

One of the new projects by the BIS is Pyxtrial, “a new experiment being launched by the BIS Innovation Hub’s London Centre to enable the systemic monitoring of stablecoins.”

The BIS says that through Pyxtrial, it will develop a platform to monitor stablecoins’ balance sheets.

“Most central banks lack tools to systemically monitor stablecoins and avoid asset-liability mismatches. The project will investigate various technological tools that may help supervisors and regulators to build policy frameworks based on integrated data,” the ‘bank for central banks’ said.

The project, named after an ancient British judicial ceremony to ensure newly minted coins conform to the set standards, aims to help regulators build policy frameworks. BIS hopes that through Pyxtrial, it can give greater visibility into what backs any stablecoin.

The project comes at a time when several banks are exploring stablecoins. In January, Australian banking giant NAB announced it would be launching its stablecoin this year. Another major Aussie bank, ANZ, launched its own stablecoin in 2022.

Elsewhere, Nigeria is exploring stablecoins to broaden its payments landscape; Hong Kong legislators want to convert their proposed CBDC into a stablecoin; while Japan is seeking to ease its restrictions on stablecoins.

Other projects on the BIS radar for the year include mBridge, Dunbar, and Jura, which focus on wholesale and retail CBDCs.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Tokenizing Assets & Securities on Blockchain