do the topic justice. the future of payments regulation so, what do these stories have to do with payments regulation? well, the story of my breakfast is just one tangible example of the transformation underway in payments. transformation that could very well end with another leap forward in payments. but the story of the first paper money is a cautionary tale. leaps in payments are not always forwards. and if mismanaged or poorly governed they can lead to a reversal or even a leap backwards. all speeches are available online at www. bankofengland. co. uk / news / speeches ensuring that innovation in payments this time around doesn ’ t end in a leap backwards is important for two reasons. the first is that we want innovation to be sustained. innovation in payments could bring significant benefits for users. innovation could meet unfulfilled customer needs, widen access to financial services, lower costs, and facilitate better integration of payments with other platforms. innovation could also support financial stability by increasing diversity in payment methods. diversity means that if there is a problem with one way to pay, there are ready alternatives, reducing the risks of disruption from any one payment method. the second is that the ability of individuals and businesses to transact safely and smoothly is critical to financial stability. people and businesses need to be able to make and receive payments on time, with confidence, even in periods of economic uncertainty. the bank of england ’ s financial policy committee, the body charged with safeguarding financial stability in the united kingdom, lists the provision of payment and settlement services as the first of the vital functions which the financial system as a whole performs in our economy. they define the very purpose of preserving financial stability as “ avoiding serious interuptions in [ these ] vital functions ”. responding to innovation already under way while some of the current innovation in payments is very visible, there is also significant innovation happening beneath the surface. increasingly, the process of electronic payments has been disintermediated or ‘ unbundled ’. example of a card payment chain a typical ‘ payment chain ’ ( the set of activities necessary for a payment to be made ) may now start with new non - bank entities using new technologies at the point of initiation – for example, the digital wallet provider that let me use my phone to pay with my debit card this morning. new entrants may also be adding an entirely new service – increasing the number of activities and players and thus lengthening the chain. one all speeches are available

they also mean that, as a payments regulator, i don ’ t currently need to worry about large fluctuations in the money flowing through uk payments systems. i can instead rely on my colleagues in the bank ’ s monetary policy and prudential regulation areas to do their jobs. absent additional regulation, stablecoins may not offer these protections. regulation of stablecoins will therefore need to be broader than the regulation of current payment chains. at minimum, where stablecoins are used in systemic payment chains as money - like instruments they should meet standards of stability and protections of holders ’ rights equivalent to those expected of commercial bank money. it is tempting to view questions about the stability of value of the ‘ money ’ flowing through payment systems as a new issue – but in fact it is one of the oldest issues in economics. indeed fifteenth century china ’ s leap backwards in payments was motivated by precisely this issue. failure to properly ensure the stability of value led to the collapse and elimination of the innovation in payments. next steps i started this talk by noting that we may be in the midst of a leap forwards in payments. this is good news. innovation – including the innovation some of you in this room are pushing forward as part of the new payments architecture project, and the work that the bank of england is pursuing on rtgs renewal promises to deliver easier, faster, cheaper, and more stable payments. but to ensure that this period of innovation does not end in a leap backwards we need to be sure that regulation keeps pace. regulation needs to facilitate innovation by avoiding picking winners or losers. instead we should focus on delivering same risk, same regulation. the protections regulation delivers for your payments should not depend on whether you are paying by cash, card, interbank, or stablecoin. fortunately, here in the uk we have an opportunity to ensure that regulation remains fit for purpose through this period of change. hm treasury is currently leading a welcome review of the payments landscape. and there is related work underway in the cross - authority cryptoassets task force that was launched by all speeches are available online at www. bankofengland. co. uk / news / speeches hm treasury in 2018, bringing together bank, fca and treasury thinking. the bank of england ’ s financial policy committee is supporting this work by providing insight into the financial stability implications of innovation in payments – in december, for the first time ever, its semi - annual financial stability report included a chapter on payments. as industry,