This should help support a proportional approach to regulation, as part of the Future Regulatory Framework proposals set out by the Treasury.18 This new framework would make it easier for our regulation to adapt to innovation, and deliver a more tailored regime for firms, responding dynamically to new challenges. We are also looking forward to working with the FCA as their Scalebox develops. We continue to work closely more generally with them on the supervisory approach to new and growing dual-regulated firms. 14  https://www.bankofengland.co.uk/prudential-regulation/publication/2019/outsourcing-and-third-party-risk-management https://www.bankofengland.co.uk/speech/2020/sarah-breeden-climbing-mountains-safely 16 https://www.bankofengland.co.uk/prudential-regulation/publication/2020/new-and-growing-banks 17 https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet 18 https://www.gov.uk/government/consultations/future-regulatory-framework-frf-review-consultation 15  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  Cross-authority and international collaboration  The Bank is just one of many institutions with a role to play in the evolving fintech landscape. And we regularly work with other public authorities as we fulfil our role, including the FCA, the Treasury, and Payments and Competition authorities. A number of institutions have put out proposals and consultations on how the UK’s regulatory framework should adapt to support financial innovation. The Payments Landscape Review, led by the Treasury, has gathered evidence across the breadth of the payments sector to understand the rapid technological developments and what that might mean for regulation. 19 The Treasury has also launched a consultation on the regulation of stablecoins,20 and the FPC has set out its expectations for stablecoin-based payment chains.21 And Parliament has launched an inquiry into the Future of Finance in the UK.

For example, some banks are increasingly using AI techniques, such as Natural Language Processing, to identify contractual obligations where Libor is involved. We ourselves have recently deployed an AI tool that can support PRA supervisory judgement with efficient analysis and extraction of unstructured firm intelligence. 8  https://www.bankofengland.co.uk/speech/2021/april/gareth-ramsay-webinar-hosted-by-the-edm-council https://www.bankofengland.co.uk/paper/2020/open-data-for-sme-finance 10 https://www.bankofengland.co.uk/news/2021/february/data-collection-transformation-plan 11 https://www.gov.uk/government/publications/cdei-ai-barometer 12 https://www.bankofengland.co.uk/quarterly-bulletin/2020/2020-q4/the-impact-of-covid-on-machine-learning-and-data-science-in-ukbanking 9  4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  But the rapid pace of adoption also means this is a pivotal moment for the UK to consider how best to support firms’ safe adoption of AI and what that means for the relevant regulatory frameworks. To inform our decisions about regulatory frameworks we’ve been engaging with fintech firms, other financial services firms and authorities, in particular through the AI Public-Private Forum (AIPPF). This year-long initiative, cochaired with the FCA, brings together a diverse group of experts to discuss the key issues related to data, model risk management and governance.13 This includes examining how existing policy frameworks affect and encompass AI, and what the appropriate level of any future potential policy should be. So far, the AIPPF has explored the key data-related issues, such as: 1. the use of ‘alternative data’;  2. how to adapt existing data quality standards to an AI context;  3. fair and equal access to third party data (including pricing);  4. ways to address bias and the challenges of operationalising ethical principles; and  5. approaches to data and AI governance.