2  All speeches are available online at www.bankofengland.co.uk/speeches  2  The accompanying burst of financial innovation spread the application of these technologies and supported the process of globalisation that bolstered trade, productivity and incomes. Once again, however, the hard and soft infrastructure of the financial system failed to keep pace. Lighttouch regulation, out-moded codes of market conduct, inadequate settlement and clearing infrastructure all contributed to the global financial crisis. We can draw on these experiences to help ensure that FinTech boosts growth and promotes financial stability. Not least because, following a raft of post-crisis reforms, the Bank’s regulatory frameworks are now fit for purpose. The Bank of England’s Financial Policy Committee (FPC) is mandated to assess new and emerging risks to financial stability, including those that may exist beyond the existing regulatory perimeter. And it now has the powers to treat similar risks consistently, wherever they originate. 4  With this new approach, the Bank can help build the right infrastructure for FinTech to realise its promise. The Promise of FinTech To its advocates, FinTech will democratise financial services. Consumers will get more choice and keener pricing. SMEs will get access to new credit. Banks will become more productive, with lower transaction costs, greater capital efficiency and stronger operational resilience. Financial services will be more inclusive; with people better connected, more informed and increasingly empowered. And tantalisingly, FinTech could help make the system itself more resilient with greater diversity, redundancy and depth.
It is its very flexibility that should make the PEPP our preferred marginal instrument for dealing with the consequences of the crisis, and I would now like to expand on its components. First, flexibility in terms of time. We are not bound by a monthly allocation. And the programme is clearly intended to be temporary: the Governing Council “will conduct net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over, but in any case not until the end of this year [2020]”. There is a risk that the economic consequences of the crisis may continue beyond the end of 2020, possibly justifying an extension to the PEPP; I then believe it would be advisable for us to clarify the criteria, “state-dependent” on the economic situation, upon which we will base our decision to close the programme in the future. Second, flexibility in terms of volume. Unlike the PSPP, we are not committed to a fixed amount – today, the PEPP can go “up to EUR 750 million”, and we stated on 30 April that we were prepared to go further if need be. However, in my opinion this would only make sense if at the same time we ensure the maximum effectiveness of the PEPP. And this brings me to my third point, flexibility in terms of allocation between countries.