Against the background of increasing digitalisation of everyday life, the combination of technological advance and appropriate regulatory frameworks footnote - both to foster competition and to manage risks – has transformed the way we pay. This approach has been a key element in the evolution and adoption of innovation in payments in the UK in recent years. It also ensures that innovation is not simply competing by taking higher risks. Setting out the regulatory approach allows those who want to innovate by providing better products and services to understand the risks that need to be managed as they develop those products. The second is that we want competition and innovation in financial services – it can increase efficiency, functionality and resilience. And it generates uncertainty for innovators. Playing regulatory catch up with new technologies once they become established and adopted at scale can be very difficult – as some of the experience in recent years with social platforms and other big techs has demonstrated. The first is that while we cannot be certain how new technologies and social and economic trends will play out, we need to have thought through in advance how the risks might need to be managed and, where the likelihood of major change is high, have the regulatory frameworks and powers in place. And often it is the unforeseen combination of a number of technological advances that generates radical change.Īgainst that background, public authorities, like the Bank of England, that are charged with maintaining financial stability and with the regulation of the financial system need to be forward looking, for two key reasons. Much lauded innovations prove to be dead ends or fail to be adopted. However, forecasting the direction and pace of technological innovation - and, crucially, the way it will interact with social and economic trends - is an even more hazardous enterprise. The future, as the last few years of pandemic and war have shown us, rarely behaves as it should. And I can say from experience that, despite the masses of data and our complex mathematical models, it is not an easy task. Central bankers are very used to forecasting the economic future. ![]() I should start however with a health warning. And which merits a speech all of its own. I will talk today about developments within in the UK, but much of the trends and the possibility of further technological advances that I will cover are relevant for cross-border payments which have lagged far behind the developments we have seen in recent years in domestic payment systems. And there are good reasons to believe that even more radical change is on the horizon. These once dusty and forgotten corners of the financial system have been transformed in recent years. I want to concentrate my remarks today on payments and money – how we pay for things and what type of money we use. Thank you for inviting me here today to talk about the ‘shape of things to come’. ![]() ![]()
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