Enabling the FinTech Transformation  We are actively exploring how new financial technologies could support our policy objectives. There are five ways the Bank is enabling the FinTech transformation. The first is widening access to central bank money to non-bank Payments Service Providers, known as PSPs. 3 As the internet revolutionised commerce, making trade faster and markets more competitive, payments technology lagged in many countries, although it is worth remembering that the UK has been a global leader on real-time retail payments. Faster Payments (FPS) was one of the earliest real-time retail systems introduced, in 2008. Now, new entrants and established players are seeking to provide payment services that are instantaneous, secure, reliable and accessible anytime from anywhere. 4 Retail consumers and firms are increasingly demanding payments completed in seconds, not hours or days. They expect payments to be seamless, reliable and cheap whether to recipients overseas or just up the street. And they expect to make payments without visits to a bank branch or even logging onto a desktop computer. Similarly, companies, financial intermediaries and governments want to process ever larger and more complex bulk payments covering multiple systems, countries and currencies. Central banks lie at the hearts of payment systems, giving households and firms the assurance that transactions have settled in the most secure form of payment: central bank money. To fulfil that role, our payments infrastructure needs to remain fit for purpose: reliable, resilient and robust. But we must also be responsive to changing payments demands.

We have learned a great deal – about the opportunities and the challenges that need to be met before DL could be used in central banking. Some of those challenges are familiar to any payments system. 10 Others are more specific to DL. For example, we would need assurance that DL systems can be scaled, retain data integrity, and operate at the speeds and volumes required by central bank infrastructure – day in, day out. And we need to be certain that the privacy of the data in those distributed copies cannot be compromised by cyber attack, not just today but in the future. One way this might be achieved is to limit the distribution of the ledger to existing trusted parties, such as other public sector entities. To move forward we are working with other central banks. Beyond this we are open to working with others to explore further possibilities, including alternative applications of the technology. 9  The criteria are publicly available in the Bank’s Settlement Account Policy, available http://www.bankofengland.co.uk/markets/Documents/paymentsystems/boesettlementaccounts.pdf. 10  In particular, participants need to be identifiable; permissions need to be assigned; messaging must be secure; and transactions must be verified, recorded, and stored. Ownership of assets must be capable of being determined with certainty, particularly in the event of a participant default. 6  at:  BIS central bankers’ speeches  In the extreme, a DL for everyone could open the possibility of creating a central bank digital currency. On some levels this is appealing.