Bank of Russia embraces machine learning at the heart of new economic indicator
The new economic indicator gauges the national economic activity, based on big data derived from news stories from online sources.
The Central Bank of Russia has embraced new technologies – this has just been shown by a report published by its Research and Forecasting Department. The report concerns the effectiveness of a new economic indicator which harnesses the power of Big Data.
The aim of the indicator is to gauge the national economic activity based on news stories from online sources and Purchasing Managers Index. To examine the huge amounts of information, the researchers have used textual analysis and machine learning.
One of the advantages of such an indicator is that it allows swift and timely reactions to the latest economic developments unlike GDP, which is published on a quarterly basis and with a delay of about a month after the quarter is over. Also, the full variety of information provided by news stories is not the same as the limited information that serves as a basis for the typical statistical indicators.
It is not yet clear whether the Central Bank of Russia will use such novel indicators and will support the development of others.
Overall, the Russian “megaregulator” has been warming up to the use of new financial technologies. For instance, although it is not supportive of Bitcoin and its likes, its stance has been milder with regard to blockchain.
Other regulators have also been looking at making use of novel fintech and regtech solutions. In July this year, Nick Cook, Head of Data and Information Operations at the UK Financial Conduct Authority (FCA), said the regulator was examining feedback from regtech firms in order to inform itself about the adoption of automated, digitized compliance. The FCA is exploring the possibility of making its Handbook machine-readable and then fully machine-executable. This means that machines can interpret and implement the rules directly.
The range of applications currently examined by the FCA include enhanced use of speech-to-text analytics tools within the FCA, as well as solutions that allow better use of social media analytics. The regulator would also utilize AI to detect financial irregularities, Mr Cook said.