Although some key payment systems are probably less vulnerable to generic, non-bespoke attacks2 than most financial firms, given their limited reliance on the internet, the consequences of a successful attack could be  1  http://www.bankofengland.co.uk/publications/Documents/records/fpc/pdf/2013/record1307.pdf. 2  Such as “distributed-denial-of-service” (DDoS) attacks – which affected some banks earlier this year. BIS central bankers’ speeches  3  severe. Addressing this cyber threat will not be just about IT security and system enhancement, but also people, processes and culture, posing challenges to the managers of FMIs as well as their overseers. For systemically important systems, recovery arrangements are particularly important, and this is an area where alternative technology such as MIRS could come to the fore. The next issue relates to the times at which the Bank’s RTGS system can be accessed by settlement banks. Currently it operates for around ten hours each business day, with the most recent change occurring in 1999. Since we made that change, a number of central banks have lengthened their RTGS operating hours quite considerably, most obviously driven by the demands of the internationally-harmonised CLS cash settlement window, and also by a more general desire to operate with a greater overlap with major markets in other time-zones. And in the UK the move to a cash pre-funded model for two of our largest retail systems may create a latent demand to access the RTGS system outside of its current operating hours. Faster Payments, which operates 24/7, often provides confirmation to customers almost instantly.

Since the implementation of our LSM, participants’ average peak intraday usage in CHAPS has fallen by around 20%, so this innovation has provided a technical means of saving liquidity, reducing incentives to otherwise adopt receipt-reactive behaviour. On-going and future priorities If the post-crisis initiatives I have discussed so far have been, or are, close to completion, one area of work where we have further to go is in ensuring continuity of access to payment services for banks that are in recovery or resolution. In the UK’s case, a new resolution regime was introduced in the Banking Act of 2009 which gave the UK authorities tools to address the risks of discontinuity. Nevertheless there is a good case that the effective statutory framework could be usefully supported by private sector initiatives (whether contractual or otherwise) to enhance further the ability of central banks, supervisors and resolution authorities to maintain continuity in payment, clearing and settlement services in recovery and resolution. For banks in recovery, that would involve avoiding “cliff-edges” in contracts that automatically exclude banks from payment schemes in the event of (say) a ratings downgrade. For banks entering resolution, we want to ensure that critical economic functions in the firm which rely on access to financial market infrastructure are not dislocated or denied. This is relevant not only for banks that are direct members of payment schemes, but also for indirect participants that rely on other banks for payment and other quasi-infrastructure services.