the payment sector to deliver this rtgs renewal programme is vital. to that end, the bank has established an extensive industry engagement approach to gain views on the scope and approach of the programme and i encourage you all to engage with it. the blueprint for the new rtgs service was published in may of last year and important milestones have been, and continue to be, delivered along the way. at the end of last year, the bank moved to a direct the expectations around service providers to recognised payment systems and the bank ’ s approach to their supervision are set out in annex 1 of the bank ’ s annual report. in line with the recognition criteria laid out in the banking act 2009. all speeches are available online at www. bankofengland. co. uk / speeches delivery model of the uk ’ s high value payment system. this was to enable a single entity to manage risks right across the system, increasing resilience and positioning the uk at the leading edge of global best practice in terms of technology, governance and risk management for payment systems. and from a regulatory perspective, the bank ’ s fmi directorate continues to supervise the hvps to the same standards as other systemically important payment systems. since the transition, the bank has introduced new mechanisms to maintain openness, accountability and challenge in the operation of the hvps. as part of the wider renewal programme, the bank has also broadened rtgs settlement account eligibility to non - bank payment service providers, subject to appropriate safeguards. non - bank payment service providers are now eligible to apply for direct access to payment systems, with transferwise and ipagoo becoming the first non - banks to join fps and bacs, respectively. here, more diverse payment arrangements with fewer single points of failure, and increased settlement grounded in central bank money, all contribute to enhanced financial stability. and we cannot ignore the game changer that wider access represents for the promotion of innovation and competition in the payment market. taken together, these examples illustrate the bank ’ s work to stay in touch with the evolving payments sector and to facilitate innovation, wherever possible, in a thoughtful and proactive way. conclusion to conclude, we in payments are working through a period of extensive change, on a journey to reinforce the uk as world leading in delivering best in class payments. it is important after key milestones have been delivered to take the time to reflect on how far we ’ ve come, but it is equally, if not more

begun to side somewhat tentatively with the optimists ; but some of the survey evidence of consumer and business confidence, on the other hand, supports a more pessimistic view. the truth is that none of us knows with any great confidence just how the us situation will evolve. for what it is worth i remain modestly optimistic, but i am very conscious of the downside risks. the outcome is obviously the major uncertainty affecting us all. the other major external influence on the economic situation in this country is the development of the exchange rate. depending on who you speak to sterling is variously described as dangerously weak, at a 15 - year low, against the dollar, or as unsustainably strong, close to its peak, against the euro. the truth is that sterling's effective exchange rate has been relatively stable for most of the past 2 ½ years – at about 105 on the standard index, plus or minus 5 %. the bilateral rates that are frequently quoted in fact tell us very little about sterling : they are essentially a reflection of the persistent general strength of the dollar on the one hand and the persistent general weakness of the euro on the other, resulting from sustained capital inflows to the united states in large part from the eurozone. it was widely expected that, with the slowdown in the us economy, and associated weakening of us earnings expectations and stock prices, these capital flows would moderate, causing the dollar to weaken and a corresponding recovery in the euro. that clearly has not, yet, occurred, although – given the size of the us external imbalance – it is difficult to see how an exchange rate adjustment can ultimately be avoided. in the meantime, the stronger dollar – and higher oil prices – have added to inflationary pressures elsewhere. but in our own case this effect has been offset by the weakness of the euro – or by sterling's bilateral strength against the euro, if you prefer – which has dampened both external demand and our domestic price level. the result of these external developments – the global economic slowdown and the pattern of exchange rates taken together – for us has been that, notwithstanding only a rather modest slowdown of our overall economy, we have continued to see a growing imbalance between the internationally - exposed ( particularly the euro - exposed ) sectors, which have been having a rather torrid time, and the more heavily domestically - oriented sectors, which have been doing rather better. the weakness of manufacturing alongside continuing growth in the services sectors is