The second is needed to enable these firms to deposit monies in RTGS on behalf of their customers. The final change provides assurance that any longer-term stability implications of these changes can be addressed under the Bank’s prudential remit. 8  We do not intend, however, to extend facilities to PSPs for which they have no need. Non-bank PSPs will not therefore be eligible for membership of the Sterling Monetary Framework – and in particular the Bank’s credit facilities. That is because PSPs are not part of the monetary policy transmission mechanism or exposed to inherent overnight liquidity risk. The Bank may also take steps to limit PSPs’ capacity to hold unlimited overnight balances on their settlement accounts. BIS central bankers’ speeches  5  billions of pounds worth of capital. With the economics of wholesale banking under pressure, cutting inefficiencies is a high priority for industry. That is why it is welcome that FinTech innovators are exploring the potential of distributed ledger technology to simplify the settlement chain, reduce its cost, and raise its speed while increasing resilience. The instruments involved range from equities to bank loans. However, the challenges facing such projects are legion, including reliability, resilience, security and scale. And fundamentally, how to prove technologies that are still nascent? One challenge an otherwise robust system of sufficient scale would not face is access to central bank money from the Bank of England. The Bank has for many years sought to ensure that, wherever possible, wholesale securities settlement occurs in central bank money.
But this means that, simply put, the people of the United Kingdom are not getting the most out of the data the Bank collects. 11  For further discussion see Broadbent (2016), “Central banks and digital currencies”, available at: http://www.bankofengland.co.uk/publications/Pages/speeches/2016/886.aspx. 12  This allows an efficient check of a firm’s cyber defences akin to the way a policeman could walk by a house and observe, from the outside, its security features – whether the gate is locked; whether it has an alarm; whether windows have been left open; what routes intruders might use to gain access to the property; and so on. BIS central bankers’ speeches  7  That’s why we are investigating ways of anonymising and de-sensitising data – fully respecting privacy laws without losing analytical content – to allow wider sharing. Progress has been encouraging creating the prospect of better informed policy making. 13 These are just two examples of a bigger programme of collaboration between the Bank and technology innovators. We are open to further collaboration and tomorrow will provide details of the next steps. Finally, the Bank is calibrating its regulatory approach to FinTech developments. FinTech should neither be the Wild West nor strangled at birth. The Bank is devoting considerable resources to ensure whatever develops is sustainable, not ephemeral. If FinTech enables a great unbundling of financial services, risks will change in tandem.