with the experts and innovators in the private sector too. open doors we have been doing this. over the past two years the bank of england ’ s award - winning fintech accelerator has worked with industry, experimenting with new technology and developing our understanding ramsden, d hm treasury bank of england carney, m hm treasury ( 2018 ) central banking magazine ‘ s initiative of the year all speeches are available online at www. bankofengland. co. uk / speeches in the process. we have carried out a number of proofs of concepts including those using distributed ledger technology, regtech, machine learning and cyber security. the accelerator - run proofs of concepts allowed us to change our mind - set to be less bound by convention in terms of how we run the bank of england, as an infrastructure provider, a payment systems operator and a regulator. we are now looking to build on the success of the accelerator by integrating its key approaches into our business as usual activities. so today i can announce that we have set up a new fintech hub that will sit at the heart of the bank, to consider both how the bank understands and how it applies fintech, relevant to its mission. it is important that we continue to do this with our doors firmly open. so the hub will be a central point of contact for the fintech sector to engage with the bank, and will play an active role in the new hmt / fca / bank taskforce. and it will engage with you to understand and apply these developments to support the next wave of innovation in finance, and ensure that the uk has the right infrastructure to support that into the future. being open in our minds and approach are important steps in embracing and supporting new technology. but we also need to be open to change to fulfil our mission and keep pace with an evolving financial sector. open to change change is already afoot. the open banking standard and psd2 introduce changes to access of account information and initiation of payments, requiring banks to make customer data available to authorised third parties if customers so choose. this may change the way that customers access and operate their bank accounts, such as by making them accessible via a single smartphone app developed by a third party. as the prudential regulator of uk financial services firms, the bank of england needs to be open in how it considers and responds to changes arising in retail banking from this reform. in fact, increasing competitive pressures in retail banking, enabled in part

and payments services depends upon depositors generally having a high degree of confidence that their funds will in fact be available on demand and it depends upon the cost of the services. in providing the services, therefore, the banks need to strike a balance between deploying their deposits in low - yielding, high quality, liquid assets to meet cash withdrawals, and riskier investments to generate a higher return. in this latter context banks have traditionally played a key role in financing the corporate and household sectors, earning their return by gathering information about, and assessing and monitoring, the creditworthiness of private sector borrowers, especially those who do not or cannot cost - effectively provide the comprehensive, public, information that would allow them to access the capital markets. much of the banks ’ lending, while nominally at short - term, for example in the form of callable overdrafts, is in practice illiquid and non - marketable. so a further distinctive characteristic of banks is that they typically function with a mismatch between their highly liquid liabilities and their less liquid, non - marketable, assets. there is no need, i think, to labour the importance to the economy as a whole of these distinctive banking functions, or the damage that would be caused if the banks ’ role - as the repository of liquidity, as the core payments mechanism, and as the principal source of finance to at least a large part of the economy - were seriously interrupted. that in itself helps to explain the public interest in the effective functioning of the banking system, or why banks collectively have been regarded as special. but beyond that, the distinctive banking characteristics that i have described, of liquid liabilities and less liquid assets, give rise to special needs. given the banks ’ role in the payments system they may need late access to liquidity to square their positions vis - a - vis each other after executing payments instructions on behalf of their customers. this explains why, in their routine monetary operations to relieve shortages in the money - market, central banks in many countries tend to confine their ( late ) lending to banks even when they accept a wider range of counterparties in providing liquidity through open market operations. the same distinctive characteristics make banks especially dependent upon public confidence. bank depositors are not generally in a position to monitor or assess the financial condition of their bank, so that any suggestion that a particular bank may not be in a position to meet its liabilities is likely to lead to the panic withdrawal of