reflect before we decide on the shape of a new regulatory system. another reason for reflection is that recent years have seen a natural experiment. some regulatory systems were light touch, others heavy touch, and yet others placed both ownership and regulation of banks in the public sector. yet they all failed to some degree to prevent the accumulation of risks that finally produced the crisis. so it is unlikely that there is a simple answer. any plan for reform should take into account the nature of financial risk. why were so many people misled for so long? and was there an inherent weakness in the structure of modern banking? banks are dangerous institutions. they borrow short and lend long. they create liabilities which promise to be liquid and hold few liquid assets themselves. that though is hugely valuable for the rest of the economy. household savings can be channelled to finance illiquid investment projects while providing access to liquidity for those savers who may need it. but given how risky banks are, it should not be surprising that from time to time they get into trouble. and they have done so regularly since banking began. confidence in a bank can disappear quickly making it vulnerable to a destructive bank run. if a large number of depositors want liquidity at the same time, banks are forced into early liquidation of assets – lowering their value. and, of course, if banks make sufficient unwise loans to borrowers who do not repay, then that can threaten solvency as well. banks can of course take their own actions to ensure that investor confidence is maintained. for example, a visible source of liquidity helps. in the panic of 1906, the founder of what is now the bank of america displayed his gold reserves on the street and offered to convert deposits into gold, creating confidence in his bank at a time when many others failed. forty years ago, the clearing banks in london held around 30 % of their assets in short - term liquid instruments. today that liquid assets ratio is about 1 %. for the major uk banks, almost 25 % of customer loans are now funded by short - term borrowing in wholesale markets. at the turn of the new century it was close to zero. this was the distinctive feature of the contemporary british model of banking. distinctive it may have been ; sensible it was not. hbos and rbs paid the price as the availability of this funding dried up, and not one of the building societies that de - mutualised in the 1980s and 1990s in order to expand beyond the constraints

but otherwise standard rtgs systems, built in the cloud, to enable cross - border payments to settle in central bank money simultaneously : a long - standing policy goal of central banks. this poc was particularly helpful in identifying some of the operational and technical challenges of such synchronisation. our most recent dlt poc, which we are announcing today will be done with chain, is designed to examine a key tradeoff in dlt design. the highly desirable resilience characteristics of dlt require sharing data on the ledger across a number, or all, network participants. but a fully replicated ledger poses clear privacy issues, and may be vulnerable to a cyber attack on whichever is the weakest link. the poc will examine the extent to which dlt based systems can be configured to enable privacy amongst participants, whilst keeping data on a shared ledger : one of the holy grails of dlt design. regtech : data storage and analysis ( 4 pocs ) as central bankers, we have always needed to process, store and analyse data to inform our policy and operational responsibilities. but that need has grown enormously in recent years, reflecting the increased reporting requirements on supervised firms since the financial crisis, greater availability of high frequency and qualitative data from public and private sources, and new policy responsibilities ( eg for macro - prudential supervision ). making sense of such large and diverse data sets is not straightforward. but central banks need to do so to discharge their responsibilities, whilst respecting increasingly demanding data protection requirements. of course regulated firms face a similar challenge marshalling all of these data in the first place – and a sub - branch of fintech, sometimes known as ‘ regtech ’, has grown up to facilitate the associated monitoring, compliance and reporting demands. more recently, that term has expanded to cover the use of similar technology on the regulatory side, and a good number of the accelerator ’ s pocs have been in this space, looking either at data analysis or the more advanced field of machine learning. our first data analysis poc, undertaken with privitar, looked at ways to desensitise mortgage data collected by the bank so they could be shared more widely and used alongside other more aggregated data to draw conclusions about developments in the financial system as a whole. another poc, with enforcd, examined tools allowing the bank ’ s legal team to draw out common trends in publically available regulatory enforcement actions in order to inform their