Technology and inclusion in central banking

Speech by Ms Andréa M Maechler, Deputy General Manager, Bank for International Settlements, at the BIS Innovation Summit 2024, Basel, 7 May 2024.

Good morning.

It is a great pleasure for me to welcome you to the second day of the BIS Innovation Summit.

What brings us here today is a common certainty: central banks need to innovate. They exist in a world of rapid technological change. Central banks must learn fast in order to understand how technology is changing society. And they have to build technology themselves. As BIS General Manager Agustín Carstens has said, the central bank of the future will have to broaden its perspectives, work in innovative ways and adapt constantly to meet a changing world¹.  That future is already happening.

But how do we get there?

Today I would like to share with you how we at the BIS see the role of diversity and inclusion in enabling central banks to embrace technology and foster innovation and hence to help fulfil their mandates.

Building diverse teams is a first step. As the author Stephen Covey has said: "Strength lies in differences, not similarities." Leading central banks that are focusing on investing in innovation are seeking to integrate the skillset needed to foster an innovative environment. Look around this room at the many bold, technology-minded and capable staff from a wide range of backgrounds who are incorporating new areas of expertise into central banking. Central bank careers are no longer just for economists but also for professionals from a broad range of disciplines. 

At the BIS, we too strive to build diverse teams. With a global and professionally diverse workforce, the BIS draws together people from different backgrounds and thinking styles. We are embracing this spirit of innovation right across our organisation, and we can do so only by embracing the opportunities offered through diversity.

Gender is one very important aspect of diversity. Women comprise 50% of the world's population and need to be represented in organisations such as ours. Research tells us that for a group to have a collective impact on organisational culture, it should represent at least 30% of the workforce. In 2020, we at the BIS set gender targets to 50% for new hires of line managers and senior professionals. The share of women has been increasing and today, 29% of our line managers and 28% of our senior professionals are women. While we move in the right direction, we should aspire to do even better. We still have work to do.

Our Innovation Hub is another important source of diverse thought and skills that enable us in turn to embrace new technologies and foster innovation. The Innovation Hub is a global platform led by the BIS where central banks collaborate with each other and with other stakeholders. Its staff span different locations, genders, cultures, disciplines and professional backgrounds. We have Hub Centres in eight locations around the world. They reflect the perspectives and needs of various central banks. They are home to teams of staff from the BIS, different central banks, academia and the private sector. And the teams are multidisciplinary, including data scientists, blockchain experts, economists, supervisors and lawyers – to name only a few.

But building diverse teams is not enough. Central banks need to ensure that every member of the team feels included. Diversity without a culture of inclusion is meaningless. People need to feel empowered to express their views and contribute to the success of the team. To quote diversity and inclusion pioneer Verna Myers, "Diversity is being invited to the party; inclusion is being asked to dance."

I could not agree more.

An inclusive environment fosters out of the box thinking and innovative ideas, which are so central to explore and push forward new technologies. An inclusive environment also builds resilience. Team members with different backgrounds and experiences draw strength from their diversity. They challenge each other to think in unconventional ways. And they respond better to change.

In our efforts to promote inclusion, we at the BIS are committed to walk the talk. Let me tell you how we are living inclusion and how it enables us to be more effective.

At the BIS, we innovate by collaborating closely with central banks, policymakers, regulators, lawyers, the private sector and all key stakeholders. We use approaches such as design thinking to identify potential areas of opportunity for central bank innovation and to create tangible technology-based use cases. We use these techniques to ground ourselves and to empathise with users' needs. Agile methods then help our teams to continuously rethink and review their plans, ensuring that insights and perspectives are incorporated as they emerge.

The diverse backgrounds and perspectives of colleagues from all over the Bank generate insights in a research-policy feedback loop. The BIS combines practical technological experimentation from the Innovation Hub with cutting-edge research and policy development from our economists and experts. Think about the payments-related projects such as Nexus and Agorá, or the TechSprints the Innovation Hub is conducting. These pioneering projects seek to provide ongoing synergies with the policy work done by the BIS Committee on Payments and Market Infrastructures, BIS research and analytical work, high-level policy discussions at the BIS and in other international forums, and close interactions with the private sector.

This is also true in other areas. On climate, we at the BIS integrate the latest research from our economists with knowledge developed by our risk experts, banking specialists and corporate services experts. We use the resulting insights to contribute to the work of international bodies such as the G20 and the Network of Central Banks and Supervisors for Greening the Financial System. And we bring relevant innovative tech solutions from the Innovation Hub. Here the advancements of artificial intelligence are likely to play a catalyst role in the future. We also work closely with our hosted groups, such as the Financial Stability Board and the Basel Committee on Banking Supervision, to maximise synergies and avoid unnecessary duplication of efforts. Individually, each area contributes value. Together, they become even more relevant and powerful. They enable innovation to become reality; they enable technology to fulfil a purpose.

Embracing innovation and developing practical innovative projects teaches us a lot. Let me pass on three important lessons that we have learned through the work that is being showcased during this conference and at the BIS more broadly.

Number one: there is value in diversity. Diverse multidisciplinary teams are a key ingredient in the success of any institution or project.

Let me give you examples from the Innovation Hub: Projects Helvetia and Jura. These projects demonstrated the power of tokenisation through the potential use of wholesale central bank digital currency in securities settlement, including on a cross-border basis. The Swiss National Bank is now taking Helvetia forward in the real world, as you heard from Thomas Jordan yesterday. An important reason for the success of these projects was the diverse teams that led them. They worked closely with the private sector and policymakers to understand their needs. And they had the courage to embrace state-of-the-art innovation and the wisdom to do so in a safe, collaborative, inclusive and open environment. Collaboration with lawyers and regulators was also crucial. Without proper frameworks, safe innovation is not possible.

This brings me to the second lesson: psychological safety matters in supporting inclusive environments and in fostering innovation². 

It takes a village to nurture innovative ideas – and the critical mindset that comes with them. Everyone, irrespective of their background, should feel safe to voice their views and to put forward innovative solutions, especially if they challenge the status quo. For example, in the BIS's design thinking workshops, everyone is encouraged to brainstorm and to voice half-finished thoughts that others can then further develop. In economic research, we encourage external reviews and foster challenges internally to avoid groupthink³.  

The third and final lesson is: be prepared to accommodate and cherish teams' changing needs.

Different backgrounds come with different needs and preferences. To attract talent, we have to create a workplace that accommodates the needs of all team members. Part of this is accommodating flexible working arrangements. Another part is embracing different working styles and patterns. If you visit the BIS Innovation Hub on the third floor, or our communications and IT teams on the newly renovated second floor, you will see what I mean. These are open spaces that look more like the home of a tech startup than a central bank.

And let us not forget that we are in a race for talent, particularly in the technology space. We should challenge ourselves to engage with and attract groups who may not have traditionally seen central banking as an attractive career path. This is particularly important for historically underrepresented groups. They could be the source of the right talent for the technological innovation of the future.

Now let me conclude.

This year's BIS Innovation Summit is about "Navigating rapid innovation". It gives us the chance to discuss the opportunities and challenges that the intensified speed of technological innovation is bringing.

This reminds me of another Stephen Covey quotation: "Where you are headed is more important than how fast you are going. Rather than always focusing on what's urgent, learn to focus on what is really important."

While we pursue innovation, let's not forget that inclusion enhances the quality of our work. Inclusion matters for all of us, and it benefits all of us in our drive to embrace technology in a safe and sustainable way.

We at the BIS will continue delivering on our promise.

I thank you for your attention and wish you the very best for the second day of the Summit.

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¹        A Carstens, "Central banks of the future", speech at the Deutsche Bundesbank's internal discussion series on "Digitalisation and central banking – Is there a fundamental change under way?", Basel, 14 December 2020.

²        See Amy C. Edmondson - Faculty & Research - Harvard Business School (hbs.edu).

³        F Allen, C Bean and J De Gregorio, Independent review of BIS research, December 2016.