Central Banking Awards 2021: winners in full

Winners in 2021 include the Federal Reserve, Alejandro Díaz de León and Charles Goodhart

Central Banking Awards 2021

The winners of the Central Banking Awards 2021 have now been published in full, recognising achievements at central banks and market practitioners over the course of the past year.

The review period for the judging encompassed the immediate shock of the Covid-19 pandemic. Therefore, this year’s awards recognise the extraordinary actions central banks and their counterparties took to maintain financial stability and dampen the economic impact of the crisis.

The awards were judged by members of the Central Banking editorial team and Editorial Advisory Board, after an extensive process of interviews, research and client reference checks.

Central bank awards

Governor: Alejandro Díaz de León wins this year’s Governor of the year award for his work to uphold the integrity and independence of the Bank of Mexico at a time of major turbulence.

The Mexican governor implemented a prudent monetary easing programme despite pressure on the peso, all the while defusing tensions over the central bank’s independence. He has managed to boost the capacity, transparency and functioning of the central bank, and has overseen major projects including the development of a new instant payments system.

“In 2020, the Covid-19 pandemic had a strong impact on all economies, although with deeper trade-offs in emerging markets,” Díaz de León said in a statement on receiving the award. “In Mexico, it caused a triple shock: financial, and to supply and demand, which significantly affected economic activity and financial markets.”

The governor added: “The challenges and complex environment derived from the pandemic have highlighted the importance for the economy and society of having an autonomous central bank focused on attaining price and financial stability.”

Central bank of the year: The Federal Reserve System is recognised this year with the overall Central bank of the year award.

The Fed took extraordinary actions in 2020 to protect not just the US economy and financial system but the global system as well. Though the Covid-19 crisis pushed markets to the brink of disaster, the US central bank took decisive action to restore stability. Without the Fed’s efforts, 2020 could have been a much harder year, and the recovery from Covid much longer.

In little over two months from March 2020, the Fed had committed $31 billion in average daily discount window demand, $2.5 trillion cumulative to repo lending and $2.2 trillion in asset purchases. It also stepped into global markets, reactivating dormant swap lines to meet massive demand for US dollar liquidity.

Kristalina Georgieva, managing director of the International Monetary Fund, commended the Fed’s “rapid and decisive” actions. “Jerome Powell and the Federal Reserve System deserve credit for their agile and creative efforts to support global financial stability in the face of severe stresses,” she told Central Banking.

The Fed also reviewed its monetary policy framework, taking the bold step of adopting average inflation targeting. Though only time will tell whether the policy proves a success, the award judges applauded the effort to question deeply held beliefs and adapt the framework to modern economic challenges.

Lifetime achievement: Charles Goodhart has been recognised this year for his lifetime achievements in shaping the field of central banking.

The London School of Economics professor and former Bank of England economist not only shaped monetary policy in the UK but also played a key role in monetary reform in New Zealand, and helped establish Hong Kong’s enduring dollar peg.

Goodhart’s research is respected across a host of topics, ranging from monetary history and Europe’s monetary union to his studies in the 1990s of foreign exchange markets, where he pioneered the use of high-frequency data.

Goodhart served for many years on the BoE’s monetary policy committee, as well as spending 17 years as a senior economist at the bank, latterly as chief adviser. Commenting on the award, former BoE governor Mervyn King said: “For many decades, Charles Goodhart has been the éminence grise inspiring those responsible for the theory and practice of monetary policy.”

Goodhart himself said his association with the field of central banking for over 50 years has been “a perpetual source of pleasure and interest”.

Reserve manager: Bank Indonesia is Central Banking’s Reserve manager of the year. The past year has been intensely challenging for emerging markets, but BI’s macro-factor strategic asset allocation put it in a strong position to respond to fluctuations in the exchange rate.

The approach considers assets and liabilities linked to the currency as well as asset cycle risks. A three-tier decision-making process – the board of governors, reserve management committee and reserve management department – strengthens its governance structure. This has resulted in all-time high levels of reserves and a stabilised rupiah exchange rate.

Governor Perry Warjiyo said: “The adoption of this framework and exchange rate stabilisation policy played a key role in rapidly reversing the currency’s depreciation while preserving reserve levels during the unprecedented shocks due to Covid-19 pandemic in the first half of 2020.”

Initiative: The Saudi Central Bank’s business continuity programme was another effort that shone amid the turbulence of Covid-19. It wins this year’s Initiative award.

Few central banks were better placed to address the exceptional business interruptions than the Saudi Central Bank. Sama began developing its business continuity plans more than four years ago, with the aim of managing crises in a manner that would minimise business disruption related to operational, financial, reputational, legal and regulatory risks.

Fahad Al-Mubarak, governor of the Saudi Central Bank, said: “Risk management and business continuity are important for financial stability. This is an area that requires continuous monitoring.”

Green initiative: The award for Green initiative goes this year to the Bank of England, for its pathbreaking work on climate disclosures.

In June 2020, the BoE published a detailed report on its exposures to climate risk across all of it operations. It was the first time a central bank had disclosed climate-related risks associated with its monetary policy portfolio.

This work is far from straightforward, requiring modelling of climate scenarios before these can be applied to asset exposures. But Sarah Breeden, the BoE executive director who leads its climate change-related activities, said the report was “a necessary step for transparency as a public body which has designated climate change as a priority”.

Commenting on the award, governor Andrew Bailey said: “The disclosures let us scrutinise the climate risks in our own operations, and have helped us consider what further action we should take. I am immensely proud of the contributions made by all areas of the bank in making this report a reality.”

Economics: The award for economics research goes to Patterns in invoicing currency in global trade, a working paper jointly authored by teams from the International Monetary Fund and European Central Bank.

Authors Emine Boz, Camila Casas, Georgios Georgiadis, Gita Gopinath, Helena Le Mezo, Arnaud Mehl and Tra Nguyen conducted an extensive data-gathering exercise to build the world’s most complete database on trade invoicing. As well as filling an empirical void, the paper sheds important light on central bank policy-making in a globalised world.

Gita Gopinath, IMF chief economist, commented: “Macroeconomic policies have been guided for long by the assumption that the use of a country’s currency in world trade is closely tied to its share in world trade. This new dataset on currency of invoicing in trade builds on previous research and further demonstrates that there is little support for this assumption. Policies therefore need to be designed for a world with strong asymmetries in the use of currencies, including the dominant role of the dollar.”

Website: The award for Website of the year goes to the Central Bank of the Philippines (BSP) this year. The central bank has conducted wide-ranging reforms to its digital strategy as part of an effort to bring the BSP “closer to the people”.

At the centre of the redesign are the core functions of the central bank, explained in clear language and illustrated with visual aids. The central bank has also implemented new technology in the form of an AI chatbot and provided the governor with a forum to address members of the public directly.

Governor Benjamin Diokno said: “The upgrade of www.bsp.gov.ph is integral to our broader initiative to bring the BSP closer to the Filipino people. Thus, in making it a more potent tool for central bank communication, we also optimised its potential for financial empowerment by incorporating in it our chatbot for consumer welfare.”

Communications initiative: The Bank of Portugal wins the 2021 Communications initiative award. The Portuguese central bank has focused on strengthening the link between its internal and external communications.

In the past 12 months, the central bank launched two mobile apps – one for the general public and the other for its employees – marking the final step in a long journey to redesign its digital communication channels.

Central bank chief Mário Centeno said engaging with people is a “priority” during his governorship. “I believe a central bank should be committed to continuously explain its policy and actions to citizens, but also to listen to them,” he said.

Transparency: The Transparency award goes to the National Bank of Georgia, for working to communicate more openly with the public and the financial sector.

Its latest effort, a new financial education website, will help to increase the public’s understanding of finance through the provision of clear and concise educational material.

“Public trust is the main asset of the central bank,” said governor Koba Gvenetadze. “The trust comes with the responsibility of being an open and transparent institution in a democratic society.”

Risk manager: The National Bank of Georgia wins the Risk manager award for its liquidity stress-testing, which proved its worth amid challenging conditions in foreign exchange markets in 2020.

Governor Koba Gvenetadze said the central bank had invested “considerable effort” in building up its reserves and risk management capabilities. This was crucial during the Covid-19 shock, when the NBG had to deal with both a shock to the domestic currency and the need to deploy dollar liquidity.

“Our success relies on a capable and motivated team, state-of-the-art IT infrastructure and visionary management who support ambitious initiatives,” the governor said.

Payments and market infrastructure (retail): Central Banking awards two prizes for central banks’ efforts to boost market infrastructure, one for retail and one for wholesale. This year’s retail winner is the Central Bank of Hungary for the launch of its new instant payment system.

The system, which went live in March 2020, is open to banks and non-bank payment service providers. It also includes a directory service so consumers can use their mobile phone numbers and email addresses to send payments.

György Matolcsy, governor of the central bank, said he was particularly proud that customers across Hungary gained access to the system simultaneously, because it required a wide array of stakeholders to work together on the solution.

Payments and market infrastructure (wholesale): The Reserve Bank of New Zealand is the winner of this year’s award for wholesale market infrastructure.

The central bank has launched a new real-time gross settlement system and central securities depository, providing a secure platform for round-the-clock banking innovation.

RBNZ governor Adrian Orr said the project was the “most complex technology switch” that the payments and settlements group had ever undertaken. “The completion of the project could not have come at a better time. Just weeks after the launch, Covid hit, putting enormous pressure on the economy and our markets, but we had confidence in the integrity of our newly launched system.”

Currency manager: The National Bank of Ukraine wins this year’s currency manager award, having taken decisive steps to upgrade its series of banknotes.

“Over the last few years, the National Bank of Ukraine has put a lot of effort into the large-scale optimisation of Ukrainian currency notes and coins,” said Viktor Zaivenko, director of the cash circulation department. “Having researched the best global practices, we started to implement gradual and systemic changes aimed at improvement of the cash cycle.”

Currency initiative: The currency initiative award goes to two central banks this year: the European Central Bank and the Federal Reserve, for their CDI2 project.

The ECB and the Fed have been working on a set of common standards for banknote-sorting machines since early 2015. The aim is to ensure banknote sensors can be integrated into any banknote-sorting machine, meaning manufacturers will not have to create multiple versions of sensors every time a central bank upgrades its banknotes with new machine-readable features.

Mark Gould, the Fed’s first chief payments executive, said: “Some people might not think of pioneering technology when you talk about cash, but there is a tremendous amount of innovation happening throughout the supply chain.”

Market practitioner awards

Innovation in reserve management: This award goes jointly to the World Bank Treasury and ANZ Bank for their innovative approach to overcoming operational disruptions due to Covid-19.

“Initially, it was very difficult for us to process trades because we could not reach ANZ’s operations team due to differences in time zones,” said Aki Jain, head of asset and liability operations at the World Bank Treasury.

The World Bank Treasury and ANZ Bank agreed to create an automated confirmation message system based on Swift MT320. The system went live in July, resulting in reduced errors and improved operational efficiency and portfolio returns for many of the World Bank Treasury’s central bank clients.

Asset manager: BNP Paribas Asset Management wins Central Banking’s Asset manager award this year. The European firm’s official institutions group has nurtured many long-term relationships and is widely respected among central banks.

Beyond a competitive return performance, one key advantage highlighted by BNP Paribas’ clients is its flexibility to address specific requests. “In this [mortgage-backed securities] mandate, we required the asset manager to provide us with customised reporting. We asked them to directly connect our accounting system with them,” said Jan Schmidt, executive director of risk management at the Czech National Bank.

Climate initiative: HSBC takes the Climate initiative award this year. The UK bank has been a leader in helping central banks and governments to issue green bonds.

In the past year, HSBC has worked as co-lead arranger for a $2.5 billion green bond issuance by the Hong Kong Monetary Authority. It also worked with the government of Egypt in collaboration with the country’s central bank to issue the Middle East’s inaugural green bond.

“Although a number of central banks have taken the lead in ESG [environmental, social and governance], for a lot of central banks, it’s still very much a discovery phase,” said Bernard Altschuler, HSBC head of central bank coverage. “We’ve been particularly active holding workshops for different central banks on how they can integrate ESG into their portfolios.”

Climate portfolio services: The winner of the Climate portfolio services award is RepRisk. The Swiss company’s machine learning tool combs through reports on over 160,000 companies each day to offer central banks an early warning indicator for climate risks.

RepRisk not only offers official institutions with detailed information of individual breaches, but also broader regional and sectoral coverage. It covers companies specialised in emerging markets as well as developed economies, both large and small. 

“RepRisk really covers the entire universe of potential and current investments. It’s really quite impressive,” said a central bank reserve manager.

Global markets: BNP Paribas takes the 2021 Global markets award for its work in supporting central banks through the turbulence of the past year.

The European bank stood by its central bank clients during the most intense phases of the Covid-19 crisis, supplying liquidity and providing continuous FX, fixed income, gold and other services despite volatile trading conditions. The bank is also a leader in green bond issuance.

“Thanks to the hard work of our dedicated teams we have been able to stay close to our clients and their evolving needs, supporting them even during the most difficult of times,” said Laurent Leveque, global head of official institutions coverage at BNP Paribas.

Specialised lending: The Specialised lending initiative award goes to Clearstream this year. The firm has supported major central banks as they expand their asset purchase programmes, including the Bank of Italy and Deutsche Bundesbank.

Tilman Fechter, a member of Clearstream’s executive board, said: “Clearstream always focuses on offering efficient securities financing services, supporting central banks in providing liquidity and collateral availability to the market.”

Advisory services: This year’s award for Advisory services goes to Oliver Wyman. The firm has built a global client base among central banks, covering topics ranging from central bank digital currency to budgetary frameworks and governance reforms.

Anshu Vats, managing partner for public sector and policy, said: “OW is on the forefront of critical topics such as payments, CBDC, green central banking and supporting central banks to navigate the challenging economic and financial environment.”

Currency services provider: Crane Currency scoops the currency services provider award this year, for its work in handling changing banknote demand patterns in the wake of Covid-19.

Crane has provided clear communication as well as support to countries where cash demand increased significantly over the past year. Contingency plans saw Crane increasing safety stocks of critical supplies, to ensure the company was not only able to meet existing commitments, but also respond to new orders from central banks needing additional stocks of cash.

Sam Keayes, president of Crane, said Covid-19 presented “extraordinary challenges” for central banks and the currency industry.

Currency services initiative: CCL Secure’s recycling programme is the currency services initiative of the year.

CCL has made a concerted effort over the past few years to not only reduce its environmental impact but also assist central bank clients in recycling their banknotes. The firm has launched a new recycling plant in Mexico, which handles banknotes from across Latin America.

“For us, our commitment to sustainability runs through the entire company and will continue to be a major focus,” said Neil Sanders, vice-president and managing director of CCL.

Payment services: ACI Worldwide wins this year’s Payment services award. The firm has been helping banks and small companies connect to central bank infrastructure for several years, and its systems now account for 75% of real-time payments in Hungary.

Jeremy Wilmot, chief product officer at ACI, said ensuring banks and payment processors can seamlessly connect to core infrastructure helps ensure the success of central bank policies.

Financial market infrastructure: Bloomberg is this year’s winner of the Financial market infrastructure award.

The firm helped central banks deploy large volumes of liquidity in response to the Covid-19 shock, including by helping to upgrade the infrastructure of central banks in emerging and developing market economies.

The firm successfully launched its foreign exchange trading system in Angola, an E-bond service for Norges Bank and its Bmatch platform for the National Bank of Georgia.

“We are delighted that our efforts to provide central banks with the data and technology they need to conduct open market operations have been recognised by this prestigious award,” said Will Oberuch, global head of emerging markets trading at Bloomberg.

Collateral management: Central Banking’s Collateral management services provider of the year is Calypso Technology.

The firm helped develop a new integrated collateral management system for the financial market in Switzerland, offering greater flexibility, standardisation and automation.

The new system helps both central banks and market infrastructure providers to “improve their efficiency and fulfil their mandate to providing liquidity to the market, thereby guaranteeing national financial stability”, said Richard Bentley, chief product officer at Calypso.

Treasury systems initiative: Refinitiv’s critical work in supporting central banks’ liquidity management underpinned the firm’s win this year in the Treasury systems initiative category.

The firm counts many central banks worldwide among its clients, including Bank Indonesia, the Central Bank of Myanmar and the National Bank of Tajikistan. Refinitiv’s systems streamline auctions and help central banks stay on top of liquidity operations from front office to back.

“Refinitiv is a trusted partner of more than 150 central banks and regulators around the world,” said Sachin Somani, global director for central banks at Refinitiv. “Our data-driven approach is giving central bankers access to timely market information to guide interventions.”

Risk management technology: Ion Treasury is the winner of the Risk management technology award. The US-based firm, which owns Wall Street Systems and Openlink Financial, continued to support central banks with workshops and product enhancements as they progressed with their ‘ibor’ transitions.

Richard Grossi, chief executive of Ion Corporates, said the firm’s systems had helped central banks assess the impact of transitioning to new reference rates, and “provides a framework, tools, and action plans to help ensure compliance by business area”.

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