Podcast: Dominik Weh on why central banks need to embrace technology

February 23, 2025

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Podcast: Dominik Weh on why central banks need to embrace technology

Central banks could must “embrace failure” if they’re to get forward of latest developments within the expertise house, says Dominik Weh, a associate at Oliver Wyman.

“You possibly can solely fulfill your mandate and be related in the event you adapt to what’s occurring outdoors, and that doesn’t exclude central banks,” he says.

Throughout the pandemic, central banks have been fast off the mark to introduce insurance policies to maintain the worldwide monetary system afloat. New fee mechanisms to make sure reduction funds may very well be made shortly have been launched, new sources of knowledge have been used to formulate coverage, and dealing environments have been efficiently transitioned to digital.

“Central banks have accomplished great work and delivered on great challenges,” Weh says. “What I might argue, nonetheless, is that in a disaster… the tolerance for errors and for considering outdoors the field will increase.”

Traditionally, central banks have been slower to innovate and undertake new expertise than personal sector monetary market members. This isn’t stunning; central banks are historically danger averse given their function as guardians of financial and monetary stability.

“As quickly as you’re in a business-as-usual surroundings you see the tendency to be a little bit bit extra conservative once more with the risk-taking, and the willingness to embrace failure – one thing which fosters innovation – disappears,” Weh says.

Quite a lot of central banks have created “protected areas”, as Weh calls them, to check new applied sciences and assess their use circumstances inside dwell environments. The Financial institution of England’s fintech accelerator programme, for instance, has already had success.

The BoE’s accelerator partnered with Anomali, a cyber safety firm, to check whether or not the ThreatStream platform would assist it carry out hyperlink evaluation to determine patterns and context to menace info. Anomali’s collaboration was deemed a hit by the BoE, which went on to kind a everlasting partnership with the corporate in February 2017.