economy. into this changed landscape ron kalifa published his independent fintech strategic review earlier this year. 4 the bank welcomes this report, which provides a timely opportunity for us to reflect on our role and how ron ’ s recommendations fit with our work to support safe innovation. so how do we see our role in the fintech landscape? at its most basic, i would say that private - sector innovation relies on public - sector foundations. alongside other uk authorities and international bodies, the bank is proud to provide the infrastructure on which private sector innovation can flourish – whether that is ‘ hard infrastructure ’, when the bank, or public sector, provides core parts of the system directly, as with our real - time gross settlements ( rtgs ) service ; or ‘ soft infrastructure ’, meaning the regulation, laws, rules, and standards set by the public sector on which private companies rely. the bank stands ready to provide the right type of infrastructure depending on the situation. sometimes the bank will need to be in the lead, sometimes it will work as part of a coalition of public organisations. https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2019 / embracing - fintech - speech - by - dave - ramsden. pdf https : / / www. bankofengland. co. uk / - / media / boe / files / report / 2019 / response - to - the - future - of - financereport. pdf? la = en & hash = 34d2fa7879cbf3a1296a0be8dcfa5976e6e26cf0 https : / / www. bankofengland. co. uk / speech / 2020 / dave - ramsden - speech - public - lecture - for - university - of - nottingham https : / / www. gov. uk / government / publications / the - kalifa - review - of - uk - fintech all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice sometimes we ’ ll work in collaboration with the private sector, and sometimes our role will be to act more as a ‘ critical friend ’. and sometimes, as with rtgs, that will mean timely upgrades to critical technology, while at other times it can mean working right at the cutting edge, as with our work on central bank digital cu

on how to respond at the time, once we have the facts as best as we can gather them. however, we still think there is more that can be done to think through how firms would go about gathering initial loss information, what information their boards are likely to need to see to inform their response, and some of the practical challenges which might arise for firms. capital and model drift given the challenging market conditions i have referred to earlier, and the uncertainties i have just discussed, it is all the more important that firms hold adequate and appropriate capital against the risks they face. as you will also be well aware, your and our work in the run up to january this year included significant work on internal models, and it would be unsurprising if there was not some collective sigh of relief within the industry after january given the work involved to get to that point. but we all know that running an internal model is not just a one - off task, and there is a need for firms to continue to refine the models in the light of experience and as new data becomes available. as regulators, we need to be alive to the risk that when firms select the areas where change is required, and as internal models are updated, there is not some inherent bias towards changes which reduce the firm ’ s capital requirement, at the expense of areas of the model which might be insufficient. we are publishing today our supervisory statement on changes to internal models, setting out our expectations in respect of firms applying for bis central bankers ’ speeches approval for a major change to their approved internal models or an extension of scope to an approved internal model ( e. g. to cover new business units or risks ). in may 2016, the pra consulted on its proposed approach to monitoring “ model drift ” for firms with an internal model, where model drift is defined as the risk that the capital level generated by an internal model moves gradually over time. even acting in good faith, business pressures may create the risk that model changes generating lower capital requirements are favoured over time, and therefore that solvency standards might deteriorate. the pra ’ s proposed approach includes monitoring the internal model scr against a number of objective measures such as premium levels, technical provisions, mcr and the standard formula scr. none are perfect but all are independent of the internal model, and therefore can help provide us with a different view on the evolution of risk exposures and a safeguard against model drift. all risk measures have their