The shape of things to come: innovation in payments and money − speech by Sir Jon Cunliffe Given at Innovate Finance Global Summit, London  Published on 17 April 2023  In his speech, Jon Cunliffe looks at four areas where the tokenisation of money is now being explored. The first is stablecoins used for payments, the second is the tokenisation of commercial bank deposits, the third is the next stage of the Bank of England’s work on issuing a Digital Pound and the last is the Bank’s work to ensure to ensure these new forms of money are robust and uniform. Speech Thank you for inviting me here today to talk about the ‘shape of things to come’. I want to concentrate my remarks today on payments and money – how we pay for things and what type of money we use. These once dusty and forgotten corners of the financial system have been transformed in recent years. And there are good reasons to believe that even more radical change is on the horizon. I will talk today about developments within in the UK, but much of the trends and the possibility of further technological advances that I will cover are relevant for cross-border payments which have lagged far behind the developments we have seen in recent years in domestic payment systems. And which merits a speech all of its own. I should start however with a health warning. Central bankers are very used to forecasting the economic future.
I can report informally that I personally am highly satisfied with the progress that the joint Basel Committee and IOSCO working groups have achieved to date, which reflects in no small way the cooperation of the industry in preparing data and responses for the discussions. I expect that the Committee will release a proposal for a six-week period of public comment next month such that the proposals can be released in final form this summer. However, intensive work will continue prior to the discussions at the meetings of the Basel Committee and IOSCO’s Technical Steering Committee toward the end of March and the beginning of April. So I cannot yet comment on the solutions that may be proposed or approved by the Committee and IOSCO. I can tell you that we set, as a guiding principle, a goal to apply Basel II to these exposures in a manner that reflects as best as possible sound practices already in use when those practices appeared to be both prudent and broadly acceptable to many kinds of banks and markets. Some industry representatives have raised concerns that finding ways to apply Basel II to trading book exposures might lead to a revision of the existing “Market Risk Amendment” to the capital framework that was approved in 1995. Understandably, those industry representatives expressed concern that this might disrupt banks’ efforts to prepare for Basel II, which addresses mainly credit and operational risk.