In recent years, in the developed countries, but also in a number of developing countries, the financial regulators have established and implemented various initiatives (innovation facilitators) aimed at promoting the use of financial innovation in different segments of the financial system. Given the importance of the issue and responding to the rising challenges, our central bank has recently established an Innovation Hub – a small expert group of the central bank, dedicated to closely monitoring and supporting fintech developments. The scope of work of the Hub is directly related to the mandate of modern central banks in the field of maintaining financial stability and monitoring systemic risks. This body will support National Bank’s efforts to deepen the financial inclusion, contribute to consumer protection and to providing operational and legal certainty in the financial markets infrastructure. We strongly believe that the Hub will be a central point of contact with the industry, including the fintech firms, and will enable building internal capacities for adequate implementation of the new technologies and monitoring of the associated risks, as well as serve as a platform for sharing information and discussing best practices. Finally, the Innovation Hub will also bring the prospect of using digitalization for supervisory purposes, as a complement to our current supervisory methods, principles, and judgement. Suptech is becoming synonym for exploring new technologies, especially in the area of supervisory data collection and analysis.

This means that all parties in the blockchain can be sure that no one can unilaterally make changes without the signature of the others. Third, data are generated by smart contracts which always execute in the same expected way. The smart contract acts as an impartial judge. It executes contracts faithfully in accordance with the pre-defined contractual terms that all parties on the blockchain have agreed to. A blockchain is essentially a database that provides proof of who owns what at any given moment and an immutable record of all transactions. It is, in other words, a distributed ledger. Distributed ledger technology, or DLT, has the potential to transform many industries and economic activities. This goes well beyond the original application of blockchains to Bitcoins and cryptocurrencies. In fact, although crypto-currencies have attracted the most public attention, it is the broader applications of DLT that hold more promise over the short to medium term. Industry applications of distributed ledger technology DLT is particularly suited for industry applications where it is important to know the histories of ownership but there is no trusted central party or reliance on the central party is inefficient or costly. Take supply chain management for instance. DLT can provide the means for registering, certifying, and tracking the supply chain process at low cost. All goods will be uniquely identified and transferred through the distributed ledger, with each individual transaction verified, time-stamped, and encrypted in a transparent process. In financial services, DLT is being experimented with for a variety of applications.