This document aims to provide an overview of the main issues related to data gaps to facilitate the monitoring of the FinTech sector and to overcome the significant challenges towards incorporating FinTech activities in regular statistics. Moreover, the document explains the implications of data gaps on some of the central banks’ main areas, in particular, monetary policy, financial stability, payment systems, and economic activity measurement. Additionally, other implications related to the activity of BigTech companies, the impact of COVID-19 and Cybersecurity issues are explored, which represent an important challenge for data gathering at Central Banks. Also, it describes the main findings of the Irving Fisher Committee (IFC) survey “Central Banks and FinTech data ” based on the answers provided by Latin American and Caribbean (LAC) countries, which identify their different positions regarding this topic and the current initiatives that each jurisdiction is launching. Finally, future steps are proposed based on a policy discussion and a discussion on how LAC countries could overcome data gaps and improve data collection is provided.

In October, a new increase in the employment of immigrant Mexican workers in the United States was observed, which strengthened their wage bill. In the first ten months of 2020, the wage bill for such workers reached 192 billion U.S. dollars, equivalent to 171 percent of the Mexican wage bill for insured workers at the IMSS.

The Latin American Journal of Central Banking, which has open access, has published a new paper on Machine Learning and the behavior of financial institutions in the payment system. This article is part of  a special issue of the CEMLA Innovation Hub. Using several features of financial institutions corresponding to  payments’ participation, funding habits, payments’ timing, payments’ concentration, and centrality of the network, the authors developed a general supervised machine-learning methodology to capture the payments’ behavior of financial institutions in the Colombian large-value payment system.

The Latin American Journal of Central Banking has published a new open access paper entitled “Interconnectedness, systemic crises, and recessions”. This article, by Marco A. Espinosa-Vega, from the International Monetary Fund, and Steven Russell, from Indiana University – Purdue University (IUPUI), present a theoretical model to help explain the relationship between the interconnectedness of financial institutions, systemic financial crises, and long and severe recessions. The authors find that inefficient loan liquidation decisions can increase the severity of recessions and generate systemic financial crises, while systemic crises, in turn, contribute to creating situations in which depositors make inefficient manager replacement decisions, thus, reducing the ability of the banking system to assess credit risk, and increasing the probability of a long and severe recessions.

CEMLA, in joint with ASBA and the Financial Stability Institute (FSI) of the BIS, organized a digital meeting on cybersecurity on November 3-4, 2020, with the aim of updating the regional community on recent practices and policy developments to strengthen the cyber security frameworks, particularly in the areas of cyber testing, and response and recovery to cyber incidents. As part of the discussions at this meeting, it was concluded that it is extremely important to identify the range of objectives, exercises and resources to establish a cyber resilience testing framework, as well as regularly update the classification of incidents, the scale of risk vectors , and the coordination and communication strategies between authorities and participants of the financial system.

The Latin American Journal of Central Banking has published a new open access paper on prudential regulations for greening the financial system. This policy article, by Daniel M. Schydlowsky, from the Global Development Policy Center at Boston University, discusses the role of central banks and financial authorities in abating and containing the damage from climatic disasters, as well as their participation in subsequent recovery actions.

The XXV (Digital) Meeting of the Central Bank Research Network, co-organized with the Central Bank of Uruguay, took place on October 28, 29 and 30, 2020. On this edition, we had the honor to have Professor Raghuram Rajan as our keynote speaker. For this meeting, we had a total of over 150 registered participants, and there were 24 papers, divided into six sessions. In addition, we had two invited papers: the winners of the 2019 Rodrigo Gómez Central Bank Award presenting, and a paper that is the product of a joint effort of CEMLA and the Central Bank of Uruguay.

The first edition of the Meeting of Financial Risk Management Officers in Central Banks was held, in digital format, on October 7-9, 2020. The event was attended by 74 representatives from 25 institutions, among members and associates of CEMLA. The Meeting was intended to allow the exchange and collaboration on relevant topics to risk managers or experts. It focused on topics related to governance and risk management, the reaction to the COVID-19 crisis, liquidity provisions for emergency situations and risk management from the front office perspective.

Recently, the  American economy has shown a significant capacity to generate employment for Mexican immigrant workers.

The Latin American Journal of Central Banking, with open access, has published a new paper on assessing mortgage default risk in full-recourse economies, with an application to the case of Chile. The paper, by Diego Avanzini (corresponding author), from International Center for Globalization and Development, Juan Francisco Martı́nez, from Banco Central de Chile and Vı́ctor Pérez, from Provida AFP, shows as one of its main results that household financial conditions and their interactions with systemic determinants account for an important part of the cross-sectional probability of mortgage default.

The Fintech Forum renewed the mandate of the Working Group on Central Bank Digital Currencies (CBDC WG) in June 2019 to continue exploring the design and technology of retail CBDC, especially looking at the practical experience of pilots taking place within the region. The CBDC WG is formed by central bank experts from Bahamas, Chile, Colombia, Eastern Caribbean, Ecuador, Jamaica, Perú, Uruguay and Sweden. The CBDC WG releases a report with lessons learnt and key insights based on a Peer Review of three retail CBDC pilots.

The first edition of the Meeting of Heads of Financial Market Infrastructure was held in digital format, from September 30 to October 2, 2020. The Meeting was attended by more than 100 representatives from CEMLA central banks associates and collaborators. The Meeting served to discuss different key issues on the functioning of payment systems and financial market infrastructures, in view of the new needs posed by the pandemic and by recent developments with new financial technologies. It was also discussed on the challenges to bridge the gaps in the cross-border payments market, and the participants were updated with novelties on cybersecurity.

The Latin American Journal of Central Banking, with open access, has published a new paper on mutual funds’ portfolio allocations in Brazil, during the Global Financial Crisis. The paper, by Fernando M. Linardi, from the Banco Central do Brasil, shows that outflows were especially pronounced among mutual funds exposed to deposits and assets issued by small banks. In turn, their financial distress led to spillovers in the portfolio management business of banks. His results underscore that interconnectedness, through holdings of bank assets, played a role in the transmission of an adverse liquidity shock to the mutual fund sector.

In recent months, the evolution of the United States economy has generated a significant increase in the employment of Mexican immigrant workers. Thus, from May to August, said employment increased by 644 thousand occupations. Furthermore, the unemployment rate of such Mexican workers, which had risen sharply in April due to the suspension of economic activities, began to decline. In fact, that unemployment rate dropped from 17.1 percent in April to 8.8 percent in August.