The Bank for International Settlements (BIS) and the MAS have recently collaborated on an innovative initiative.
The BIS, a global institution dedicated to fostering international monetary and financial cooperation, and the MAS, Singapore’s central bank responsible for monetary policy, financial regulation, and supervision, have joined forces to address a pressing global challenge.
The partnership focuses on the development of a blueprint for a climate risk platform. This platform aims to integrate regulatory and climate data, enabling financial authorities worldwide to better identify, monitor, and manage climate-related risks within the financial system.
BIS, through its Innovation Hub Centre in Singapore, has taken a proactive approach to addressing financial stability concerns posed by climate change. The MAS complements this effort by bringing its regulatory expertise and focus on sustainable finance to the table. Both institutions recognize the complex challenges posed by climate change, including significant data gaps and the difficulty of assessing the associated risks.
Project Viridis, spearheaded by the BIS Innovation Hub, outlines the essential features and metrics of the proposed climate risk platform. The platform is designed to provide comprehensive data on financed emissions, exposure to physical risks, and forward-looking assessments under various climate scenarios. This initiative is crucial as the impact of climate change on global financial markets continues to escalate, necessitating adaptive and innovative responses.
In addition to the blueprint, the partnership leverages advanced technologies such as natural language processing to extract and analyse climate-related data from corporate disclosures. This enables a deeper understanding of financial institutions’ climate-related risks and potential areas requiring more intensive risk assessment.
Maha El Dimachki, head of the BIS Innovation Hub Singapore Centre, said, “Project Viridis demonstrates how regulatory data can be integrated with climate data, which are extracted from corporate disclosure documents using natural language processing techniques. This provides authorities with insights into climate-related financial risks, helping them form an initial view of financial institutions’ risk exposures, and to identify areas that may require deeper risk assessment.”
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
