We actively support the design of, and participate in, a number of market wide exercises to explore coordination in the unlikely event of a major outage to the retail systems, or participants’ connections to the retail systems. SIMEX16 focused on a multi-day outage to RTGS and SIMEX18 focused on a protracted operational outage of a Global Systemically Important Bank; a summary report of SIMEX18 was published last month.15 Next month, we will participate in a desktop exercise to explore the impact of large scale rerouting of payments between CHAPS and Faster Payments. These exercises are sponsored by a Cross Market Operational Resilience Group which is co-chaired by UK Finance and the PRA. The Bank and Pay.UK are also exploring a potential solution for allowing batches of critical retail payments to settle directly over the renewed RTGS infrastructure, whilst ensuring critical wholesale payments are not impacted. This solution could help the FPC’s pilot impact tolerance be met for retail payments in the unlikely event of a major outage to the retail systems. Providing additional channels for retail payments to settle in a contingency situation increases the resiliency of the whole financial system, making it even less likely that users will experience a delay to their salaries, pensions, or other time sensitive payments. The Bank is planning to introduce ISO 20022, an international standard for financial messaging, for CHAPS. Pay.UK also plan to introduce ISO 20022 in their New Payments Architecture: together we are developing what is known as a Common Credit Message.
The UK’s payment systems (including retail payment systems such as Faster Payments and Bacs, and the high value system – CHAPS) connect payment service providers (PSPs) together, as a means of moving money between them. It is therefore vital that the organisations that manage the payment systems dedicate a lot of time to enhancing operational resilience and cyber security. And innovations, including instant payments, will also benefit from a resilient foundation. The Bank’s operation of RTGS, and more recently CHAPS, makes a vital contribution to our overarching mission of maintaining monetary and financial stability. CHAPS is the UK’s high value payment system and settles an average of £ billion each working day, representing 93% of non-cash payments in the UK by 1  https://www.assetnews.com/fintech/europe-trumps-asia-fintech-funding-q2-2019 https://www.ukfinance.org.uk/sites/default/files/uploads/pdf/UK-Finance-UK-Payment-Markets-Report-2019-SUMMARY.pdf https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/payments-a-platform-for-innovation-speech-by-victoriacleland.pdf?la=en&hash=5841227A82F5C75B75FFE32027EEF5EDA61D2C70 4 https://www.bankofengland.co.uk/report/2019/future-of-finance 5 https://www.fca.org.uk/publication/research/technology-cyber-resilience-questionnaire-cross-sector-report.pdf 6 https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/discussion-paper/2018/dp118.pdf 2 3  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  value. RTGS is the infrastructure where the key UK payments systems – including CHAPS – ultimately settle, supporting stability across the broader financial system. The area of the Bank that I lead (Banking, Payments and Innovation) has provided real-time settlement through our RTGS infrastructure since 1996. In 2017, as part of our vision to enhance stability, we took the step of bringing the management and operation of CHAPS into the Bank (until then the CHAPS payment scheme was operated by a private sector company – CHAPS Co). The Bank understood and mitigated the risks within RTGS, and CHAPS Co looked at risks in its participants.