The principle of same risk, same regulation is technology neutral – and could provide clearer expectations to innovators for how they will be treated by regulators when entering the market. But while same risk, same regulation may seem obvious, as payments chains increasingly continue to involve new entities, our regulatory framework may require some adjustment to meet this principle. Responding to innovation around the corner Some of the most high profile potential changes in the way we pay haven’t happened yet. The new “global currency” proposed by Facebook and partners, Libra, generated headlines across the globe when it was announced last summer. Other proposed private ‘stablecoins’ continue to emerge. The language some of these proposals use to describe themselves is grand. Libra promises to “Reinvent money. Transform the global economy. So people everywhere can live better lives.”  In practice, stablecoin arrangements would use cryptoassets (known as coins or tokens) for transactions currently processed by retail or wholesale payments systems. Existing crypto assets – for example Bitcoin – have so far proven too volatile to become widely accepted as payment. Stablecoins propose to address this by using asset backing to establish and maintain a stable value. It is concievable that some stablecoins – particularly if integrated into existing online platforms or social media – could achieve widespread adoption very quickly. In India, Google Tez reported having 50m users 10 months after its launch in September 2017. In China, Alipay and WeChat Pay by some measures handled more than $ in mobile payments in 2018.

Example of a card payment chain  A typical ‘payment chain’ (the set of activities necessary for a payment to be made) may now start with new non-bank entities using new technologies at the point of initiation – for example, the digital wallet provider that let me use my phone to pay with my debit card this morning. New entrants may also be adding an entirely new service – increasing the number of activities and players and thus lengthening the chain. One 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  example is technology aggregators, who provide smaller banks with IT access to payment systems and clearing infrastructure. The current regulatory framework was designed in a world in which banks and a small number of systemic payment systems made up the entire payments chain. Under the current framework, systemically important payment systems (the core infrastructures that undertake the activities of authorisation, clearing and settlement), and some of their critical providers, are regulated by the Bank of England for financial stability purposes. For example, the Bank of England is supervising the development of the New Payments Architecture to ensure the opportunity is taken to enhance resilience. Combined with the separate financial stability focused regulation of banks, who provided initiation and access, this used to capture the entire payment chain. Example of ‘unbundling’  But today, the banks and payments systems covered by this regulation are only a subset of the entities involved in many payments chains.