The Bank of Papua New Guinea (BPNG) has entered into a collaboration with network analytics specialist FNA to enhance the monitoring of intraday liquidity and systemic risk.
BPNG’s recently established Payment Oversight, Compliance & Monitoring Office will utilise FNA’s technology to gain a comprehensive understanding of liquidity and risk within its Real Time Gross Settlement (RTGS) payment system. This system is an integral component of the Kina Automated Transfer System (KATS), which encompasses four commercial banks from the region as participant members.
FNA’s software, a part of its Suptech solutions suite designed for central banks, equips BPNG with the capability to conduct intraday liquidity simulations and stress tests.
Consequently, BPNG can assess the effect of stress events on its member banks and the payment system. Integrated with the bank’s internal reporting, the Payment Oversight, Compliance & Monitoring Office receives daily updates on the systemic risk level.
In addition, the system sends alerts when a bank experiences liquidity issues, enabling BPNG to monitor and manage risk effectively in real time.
Bank of Papua New Guinea monitoring and analytics unit, payment system oversight and compliance department manager Francis Poko said: “We are very proud to work with FNA, a global leader in Suptech & network analytics, to understand systemic risk and liquidity usage within BPNG’s payment system.
“The simulation and stress-testing technology provided by FNA has helped our team to have a full and better visibility of the commercial banks’ usage of intraday liquidity. We look forward to continuing our collaboration with FNA.”
The importance of network analytics and simulation technology is rapidly increasing within technology-driven supervisory regimes. When combined with Suptech initiatives, network analytics empower central banks and financial institutions to comprehend the functioning of their financial networks, providing invaluable insights for micro and macro policy decisions.
Similarly, simulation technology offers a laboratory-like setting where supervisors can analyse the potential effects of various scenarios, stresses, and disruptions on the financial system.
FNA founder and CEO Kimmo Soramäki said: “We are thrilled to partner with the Bank of Papua New Guinea to enhance their monitoring capabilities and strengthen their understanding of liquidity and systemic risk.
“This collaboration exemplifies the growing importance of network analytics and simulation technology, equipping central banks and financial institutions with valuable insights for informed policy decisions.”
