of each transaction. what i have just described, is economic theory, the ideal world. in reality, of course, integration and innovation are not as smooth. integration, for example, may require compromise, and comes with adjustment costs. there is a silver lining, though, as adjustment to new technologies also presents opportunities to renew the infrastructure and do away with legacy. network effects and economies of scale may also result in concentration. while concentration can offer efficiency benefits, there is a risk that the resulting market power will be misused. apart from the two - way causality, integration is not the only driver for innovations in payments. there are several other possible drivers. in 2012, the bank for international settlements ( bis ) published an in - depth report on the matter. it was based on an analysis of over 120 innovations reported by 30 central banks. the report distinguished a number of exogenous and endogenous factors that could serve as either a driver or barrier for retail payments innovations. the report revealed that the two main endogenous factors are cooperation and standardization, which we have already discussed. the three key exogenous factors are, not surprisingly, technological developments, regulation, which we have also dealt with, and user behavior and user demand. the report suggested that user demand may even be the most important driver for innovation, since it forms the basis for a valid business case for suppliers. it is ultimately the users, normal people and businesses, who determine an innovation ’ s success. what is then role of central banks in payments innovation? this role is, in my view, two or threefold. central banks can monitor and assess the relevant developments. it is also up to them to give some guidance to markets, explain what their policy objectives are, and help foster public awareness of specific issues, like security. and last but not least, they can also facilitate new developments, particularly if changes are needed in settlement procedures, which is their natural domain. trends in retail payments although the bis paper was published five years ago, i think its findings are still highly relevant, and indicate what we can expect in terms of retail payments innovation. the report identified a number of trends. first, the market is dynamic, so although there are many new developments in payments, only a few survive. second, most innovations are developed for the domestic market, and not many have international reach. similar types and categories of innovations were reported in many countries, although the exact functionalities differed according to domestic market conditions

, her majesty ’ s government is extending the senior managers regime to all firms in ficc markets and putting them on a common basis with banks and insurers. being a senior manager in finance now brings the responsibility and accountability that befits what the best in the industry have long recognised : finance is a true profession. the bank of england ’ s role in markets has been comprehensively overhauled. we ’ re replacing constructive ambiguity with open for business when we provide liquidity to markets. we ’ re working with others as one bank to develop markets that support financial stability and the real economy. we ’ ve revamped our governance and we ’ re holding ourselves to the highest standards of accountability, including the senior managers regime on top of parliamentary and public scrutiny. so a huge amount has already been completed to make markets fairer, more resilient, accountable and effective. these reforms are essential for the uk to remain the leading international financial centre. bis central bankers ’ speeches they are essential not least because the size of the uk - based market - based financial system could increase from six to nearly 15 times uk gdp by 2050. but the journey isn ’ t finished. today is a chance to take stock and reflect : not just on our achievements but on what we might have missed, overdone, or simply got wrong. given the complexity and scale of financial reform, it would be remarkable if every measure were perfectly constructed. or if they all fit seamlessly into a totally coherent, self - reinforcing whole. authorities must have the courage to listen, the honesty to admit our mistakes and the confidence to set them right. because we ’ re determined not to repeat the cycles of the past when bursts of post - crisis reforms would eventually drift into complacency and cohabitation. when the caravan moved on, markets were left unattended to slip slowly into excess and ethical drift. today we want not only to profile progress made, but also to spur a continual process of review and reform. this isn ’ t just about fixing the fault lines that caused the last crisis, but also about seizing new opportunities from fintech and market - based finance. it's about building truly global markets, in the uk and elsewhere, and the cross - border governance and cooperation they need to function well. it is precisely because we don ’ t know all the answers that we ’ re setting questions before us today : - what more needs to be done? are there gaps that