Indeed, sometimes when I hear of democratising finance, spreading risk in capital-light originate-to-distribute models, I think I haven’t been this excited since the advent of sub-prime. FinTech could also affect the conduct of monetary policy. Unbundled banking would change the roles of bank capital and funding costs in the credit channel of monetary policy. If FinTech enhances participation in financial markets, the wealth channel of monetary policy could strengthen. More broadly, Big Data techniques could tell us about the state of the economy more accurately and promptly. Forecast performance could improve, akin to the forecast improvements that better measurement of atmospheric conditions has, over time, delivered for meteorologists. may help to lower the compliance costs which major banks say have been a factor in their decisions to withdraw from correspondent banking. And in time, FinTech may broaden the pool of non-banks able to provide individuals and companies with viable alternatives, but for now banks continue to act as gatekeepers to payment and settlement in central bank money. BIS central bankers’ speeches  3  My own forecast is that FinTech’s consequences for the Bank’s objectives will not become fully apparent for some time. Many of the technologies needed to deliver such transformations are nascent – their scalability and compatibility untested beyond Proofs of Concept. Moreover, the bar for displacing incumbent technologies is very high. Nor will the Bank of England take risks with the resilience of the core of the system. Disruption won’t come either easy or cheap. 4.

BIS central bankers’ speeches  1  To its advocates, the wave of innovation sweeping through the world of financial technology promises nothing short of revolution. ‘FinTech’ heralds the dawn of narrow banking and portfolio optimisation. It will change the nature of money, 1 shake the foundations of central banking and deliver nothing less than a democratic revolution for all who use financial services. Revolutions are not always abrupt, and sometimes their origins remain obscure. In noting the possibilities at the start of the Twentieth century, Keynes remarked that “the inhabitant of London could order by telephone, sipping his morning tea in bed … the various products of the whole earth … adventure his wealth in the natural resources and new enterprises of any quarter of the world…; [or] decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend…” Such global portfolio management was made possible by technological developments stretching back decades, ranging from the ‘pantelegraph’ of the 1860s – capable of transmitting signatures to verify bank deposits – to the cable buried deep beneath the Atlantic that could transmit eight words a minute. Such remote trade confirmation and low latency that made the Flash Boys of the day possible. The financial globalisation these innovations enabled was built on a much earlier, simpler, and more profoundly transformational development: the ledger. For there is no finance without the ability to record transactions, balances, and obligations.