Bank deposits are already uniform, robust money in the UK – indeed they account for 85% of the money in circulation for retail purposes and are generally acceptable for wholesale transactions. We have a comprehensive regulatory regime, deposit insurance and resolution and insolvency procedures to protect bank depositors. Commercial banks settle between each other in Bank of England money which helps to reinforce uniformity. Nonetheless, the tokenisation of bank deposits raises some important questions. Currently, money issued by a commercial bank can only be held by someone that has an account at that bank. It is not directly transferable from one holder to another unless both parties have an account at the same bank. In order to transfer money from the holder of an account at one bank to the holder of an account at another bank, there needs to be a transaction between the two banks which ultimately settles in Bank of England money across our books. New ledger technology developed in the crypto world could allow tokenised bank deposits to circulate freely as ‘tokenised deposit money’, in what might be thought of as a digital banknote issued by a private bank’. They would constitute claims on the issuing bank that could be held, for example in a wallet, without the holder having to have an account at the issuing bank. This raises some difficult issues about how deposit insurance would operate in the event of failure of the issuing bank. Could a bank maintain a single customer view of those who held its liabilities?
In addition, detailed EU guidelines must be in place before PSD2 can have its intended effect. PSD2 takes account of two new types of payment services: payment initiation and account information services. Payment initiation permits third parties (in addition to customers and customers’ banks) to initiate payments from customers’ accounts. A third party may, for example, be a company that offers a payment application for smart phones. Account information means that third parties gain access to customer account information and can provide customers with aggregated online information for multiple payment accounts. This change separates ownership of the account systems from the provision of payment services. This is intended to facilitate innovation and competition for customer services, on top of the account infrastructure. Payment initiation and account information may be offered as independent services or as part of a wider array of services. Platform-based service providers in particular will likely explore the possibilities for offering payment services bundled with other services. PSD2 will, in principle, promote a more efficient payment system. At the same time, we must be prepared for the possibility that an altered market structure and technological innovation may lead to new vulnerabilities and risks. This may necessitate further regulations. Norges Bank will consider measures if they are required. The aim must be the continued existence of a robust and efficient payment system. 1/5  BIS central bankers' speeches  The payment market is characterised by network effects and platform competition.