A payments strategy for the 21st century  Remarks made by Andrew Hauser, Executive Director, Banking, Payments and Financial Resilience  Payment Strategy Forum “Launch of the Final Strategy”, London 29 November 2016  1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Thank you very much for the opportunity to speak to you today at the launch of the PSF’s Payments Strategy st  for the 21 century. I want to start by emphasising that this is not the Bank of England’s strategy – or the UK authorities’ as a whole. And that in fact is its great merit: because it has been drawn up by a genuine partnership of those who actually provide and use retail payments services, with the interests of those users uppermost in their minds. But that doesn’t mean the Bank has been ‘hands off’, or lukewarm over the direction of travel. Quite the reverse. We have a deep interest in, and responsibility for, maintaining the stability of sterling payments. First, through our statutory responsibility for the supervision of the major payments schemes. Second, by ensuring that all material payments either settle in, or are backed by, central bank money – the safest form of settlement asset. And, third, through our role as member of some schemes as a bank in our own right. It is sometimes said that a focus on stability impedes innovation. But there is no reason why that has to be true.
To make a domestic retail payment, you can use physical cash (drawn from a bank or a LINK ATM), a cheque, a credit or debit card, a real-time payment over FPS, or a batch payment across Bacs. Wholesale payments may go through CHAPS or the embedded payment schemes of CREST or LCH. 1  http://www.bankofengland.co.uk/publications/Pages/speeches/2015/799.aspx 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  Cross-border payments might use a correspondent bank, a direct link to an overseas RTGS system or CLS. In fact, it’s easy to list 10 or 15 payments pathways without even trying. Each system does a great job for its own customers. But each operates, by and large, in splendid isolation from one other, requiring different standards and languages, technologies, fees and governance frameworks. Those frictions in turn create barriers to entry for new payments providers, and can also pose risks to system-wide resilience, making it hard (sometimes impossible) to reroute payments between systems in the event of outages. Those characteristics are increasingly anomalous in a world in which payments users are demanding ever more seamless services – in real time, 24/7 – at lower cost, using the latest technology, providing rich information – and, perhaps most importantly of all, in ways that are secure against increasingly innovative forms of cyber attack. That is why it is timely to look afresh at the UK’s retail payments systems, as the PSF has done.