Bank of England Staff Working Paper No. 624, available at https://www.bankofengland.co.uk/working-paper/2016/qe-the-story-so-far. The debate about the precise effects of QE continues; for two recent contributions by my MPC colleagues, see Vlieghe, J. (2018), “The yield curve and QE”, speech at Imperial College Business School available at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-yield-curve-and-qe-speech-by-gertjanvlieghe.pdf, and Broadbent, B. (2018), “The history and future of QE”, speech at the Society of Professional Economists available at https://www.bankofengland.co.uk/speech/2018/ben-broadbent-society-of-professional-economists. 9 For more on the TFS see the information on the Bank’s website at https://www.bankofengland.co.uk/markets/quantitative-easing-andthe-asset-purchase-facility. The Bank also lent directly to banks via the Funding for Lending Scheme (FLS) in 2012, a scheme designed to incentivise banks to lend to the real economy at a time when bank lending growth had been persistently very weak, not least because of spillovers from the euro area crisis. But this was a fully collateralised scheme, classified as off balance sheet under a collateral swap arrangement. For more on the FLS see Churm, R. et al (2012), “The Funding for Lending Scheme”, Bank of England Quarterly Bulletin 2012Q4, available at https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2012/the-funding-for-lending-scheme.pdf. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  10  in wholesale markets. The latter is typically at a shorter term than the former, so this activity exposes banks to funding liquidity risk. Banks need to be able to take on this risk to execute their economic function. But it remains a risk nonetheless. Under ordinary circumstances, banks should largely be able to self-insure against this risk; indeed, that is a core part of effective bank risk management.

I would add that an excessive focus on price competition also inherently increases the risk profile of MSB companies which companies must carefully consider. It can lead to a loss of focus on longer term competitive positioning which remains key to any successful business, compromise service quality standards and heighten compliance risks. The insights gained from a deeper understanding of customer needs and priorities should serve to focus competitive strategies on how to improve the customer experience. We firmly believe this needs to be an important part of the conversation in pursuing the goals of more inclusive and efficient remittance solutions. We are encouraged by the efforts of some MSB companies that have responded to greater competition through a focus on innovation and investing in building a trusted company brand that consumers can be confident in. As an example, today, there are 17 remittance service providers that have introduced digital remittance services, almost double the number only 2 years ago. The requirement for employers to pay foreign workers’ salaries through their local bank accounts starting next year will provide further impetus for the digitalisation of remittance services. With a high level of smartphone penetration among migrants in Johor Bahru at 74% and internet access at 90%, significant opportunities exist to promote e-remittances. Currently, outward remittances conducted through mobile phones or the internet represents less than 10% of total outward remittances recorded by MSB companies.