to invest and think more intensively about what the future world of payments should look like. and due to the pivotal nature of payments, the public sector is actively involved too, seeking both to enhance and strengthen the existing infrastructure but also assessing whether there is a more fundamental approach to complement it. new forms of digital money could contribute to faster, cheaper, and more efficient payments and have financial inclusion as a prominent design consideration. as innovation develops further in this space, it will be important that regulation follows suit. our governor andrew bailey noted in his recent speech, that it is crucial the regulatory framework adapts to innovation in a way that fulfil the bank ’ s core mission to promote the good of the people of the uk. we cannot allow innovation to have “ free pass to ignore public interest ”. 3 earlier this month the bank published a discussion paper on digital money including the possibility of central bank digital currencies ( cbdc ). 4 a cbdc would, if introduced – and that is an important if being considered by a number of recently announced groups5 – be a new form of central bank digital money issued by the bank of england for use by households and businesses. importantly it would co - exist alongside cash, commercial bank deposits, and core payments infrastructure such as rtgs. rtgs at the heart of uk payments a decision on whether to introduce cbdc will be made in due course. but a significant programme to enhance the existing infrastructure is already well on the way to delivery and is set to start to make a real difference 12 months from now : the renewal of the rtgs service itself. rtgs sits at the heart of uk payments. it is the infrastructure where the key uk payment systems ultimately settle – chaps and a myriad of retail systems including bacs, faster payments, cheques and cards. the rtgs service settles an average of £700bn each working day ( which is equivalent to more than the uk ’ s gdp every three days ). this settlement occurs in central bank money, the ultimate risk - free asset. in addition to its settlement functionality, rtgs also plays an important role in the implementation of monetary policy. and the smooth operation of rtgs makes a vital contribution to the bank ’ s overarching mission of maintaining monetary and financial stability. in april this year we celebrated the 25th anniversary of our current rtgs service. the service has been enhanced along the way with a number of technical and policy upgrades. we were the first major central

on another call, this time with the treasury and its debt management office ( dmo ), to discuss the ‘ ways & means ( w & m ) account ’ – in modern language, the government ’ s overdraft facility at the bank of england, funded by reserves creation. w & m sits at the very bottom of the hierarchy of tools used to meet the government ’ s borrowing needs. the primary tool is gilt issuance – for many years used by the dmo to ‘ fully fund ’ those needs over the medium term ( usually a fiscal year ). because government cash flows are not perfectly predictable, ‘ rough tuning ’ is achieved through the issuance of marketable treasury bills. and ‘ fine - tuning ’ is done through the money markets. the w & m exists purely as a back - up to those fine - tuning operations. given these multiple alternative tools, w & m had seen no material usage in over a decade ( chart 13 ). but clearly the period of dysfunction in gilt and money markets in march and early april raised the possibility that it might be needed if all of the other alternatives were temporarily rendered ineffective. working together, the uk authorities ’ challenge was to remind financial markets that its sole purpose was as a temporary, short term cash management tool to smooth cashflows, and not in any way intended as a more lasting replacement for gilt issuance as the government ’ s primary financing source : something that could all speeches are available online at www. bankofengland. co. uk / news / speeches complicate the execution of monetary policy. those principles were embodied in a public announcement released on 9 april. in the event, the rapid normalisation of market conditions allowed the government to announce, and so far meet, sharply higher near - term gilt issuance plans ( chart 14 ) without any need for recourse to the ways & means account. the account remains available for use, if unexpected future cash needs cannot be met by any other market - based means, e. g. because of a renewed period of dysfunction. but in such circumstances, the usage would be short term ; and, as soon as possible before the end of the year, the dmo would scale up its market operations to repay the w & m balance. chart 13 : usage of the ways & means account £ bn chart 14 : dmo funding plans compared 2016 - 2019 average 2020 ( dmo announced ) £ bn source : bank of england. available here