mark carney : enabling the fintech transformation – revolution, restoration, or reformation? speech by mr mark carney, governor of the bank of england and chairman of the financial stability board, at the lord mayor ’ s banquet for bankers and merchants of the city of london, mansion house, london, 16 june 2016. * * * given the tragic murder of jo cox mp on 16 june, at the mansion house dinner in lieu of this speech, the governor paid tribute to ms cox and the highest standards of public service she represented throughout her life. 1. introduction my lord mayor, chancellor, my lords, ladies and gentlemen. let me begin by thanking andrew bailey for his outstanding record of public service during his 31 years at the bank of england. andrew is an extraordinary public servant who has devoted his entire professional life to serving the people of the united kingdom. during his career, he has worked across all of the bank ’ s policy areas, combining leadership and innovation to deliver consistently the bank ’ s policy objectives. his work in helping to manage the crisis and then to develop the post - crisis regulatory framework has been exemplary. he has made the prudential regulation authority ( pra ) a highly respected and effective regulator and built a team of exceptionally dedicated colleagues. i would like to thank andrew for his counsel and support since i joined the bank and wish him every success in steering the financial conduct authority ( fca ) at this vital time in its history. i admire his commitment to ensuring the uk ’ s financial system serves its real economy and i look forward to continuing to work closely with him in future. although the bank has placed itself in purdah, its duties never cease. the people of the united kingdom, via parliament, have conferred tremendous responsibilities on the bank. these remits must be pursued continuously, independently and transparently. the independence of the bank of england is at the heart of the integrity of the financial system. and the bank ’ s independent conduct of monetary policy is vital to ensuring price stability and to support strong, sustainable and balanced growth across the united kingdom. transparency is the hallmark of modern central banking and democratic accountability. today, consistent with its statutory responsibilities, the nine - member independent monetary policy committee ( mpc ) announced its latest monetary policy decision. the published minutes of that meeting contain, as they should, carefully calibrated and precisely worded descriptions of the mpc ’ s deliberations, the adjustments to our outlook, including our assessment of the

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. the criteria are publicly available in the bank ’ s settlement account policy, available http : / / www. bankofengland. co. uk / markets / documents / paymentsystems / boesettlementaccounts. pdf. 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. 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. for example it would mean people have direct access to the ultimate risk - free asset. in its extreme form, it could fundamentally and perhaps abruptly re - shape banking. however, were it to co - exist with the current banking model, it could exacerbate liquidity risk by lowering the frictions involved in running to central bank money. 11 these questions and others are why these topics are being examined as part of the bank ’ s research agenda, with the prospect of a central bank digital currency for the uk, in my view, still some way off. we will work to make payments easier, and though cash may no longer be king it once was, its reign will endure for some time. the fourth way the bank is enabling the fintech transformation is by partnering with fintech companies on projects of direct relevance to the bank ’ s mission. i am announcing tonight that the bank is launching a fintech accelerator to work in partnership with fintech firms on challenges that we, as a central bank, uniquely face. the accelerator will work with new technology firms to help us harness fintech innovations for central banking. in return, it will offer firms the chance to demonstrate their solutions for real issues facing us as