The fact that some had to go through a difficult period of adjustment was first and foremost a consequence of their past decisions. Nevertheless, standing on one’s own feet is not the same thing as standing alone. Renationalising our economies is also not the answer. It would not change the basic economic realities that European countries confront – that we are ageing societies which have to grow primarily through raising productivity. And it would not offer citizens any more economic security. There is no country in the world that is both prosperous and insulated from globalisation. In fact, the Single Market process was introduced precisely because European economies, acting alone, could not create enough jobs in an increasingly open world. And that process led in turn to monetary union because – as the ERM crisis in the early 1990s showed – countries realised they could not integrate in part and benefit in full. The financial and sovereign debt crises since 2008 have only reaffirmed that truth. So the answer is not to unwind integration. Nor is it to hold out an unattainable vision of where integration should lead. It is to complete our monetary union in the areas where it can and needs to be completed. We need ambition in our ends and pragmatism in our means. We have already shown how this can be done with the solidarity and stabilisation mechanisms that were set up during the crisis. Banking Union is also a remarkable achievement.
It may reshape the mechanisms for making secured payments: instead of settlement occurring across the books of a single central authority (such as a central bank, clearing house or custodian), strong cryptographic and verification algorithms allow everyone in a DLT network to have a copy of the ledger, and give distributed authority for managing and updating that ledger to a much wider group of agents. The Bank is undertaking work to understand the implications of new digital or e-monies and new methods of payments and financial intermediation as part of the One Bank Research initiative 6. Machine learning also promises to transform financial services and widen the potential players in payments. Banks will increasingly be able to automate interaction with customers. As ever more data is analysed and algorithms that “learn” replace rules-based programming, a number of areas such as credit assessment, risk management, fraud detection and product personalisation will increasingly rely on technology. Many banks are already embracing these changes, but many non-bank players with ready-made access to a wide range of customers and their data are well positioned to compete. Alongside the potential opportunities offered by changes in technology, there are also potential risks. For example, the demand for real-time retail payments can make it harder to implement effective defences against money laundering, terrorist financing, identity theft or other forms of fraud. More connected, IT-intensive networks provide more channels for cyber attackers to target and greater risks of contagion.