Sarah Breeden, Deputy Governor of the Bank of England, outlined some steps the central bank is taking to support innovation during a speech yesterday. She highlighted the Bank’s plans to support the wholesale settlement of tokenized assets in central bank money. And she emphasized the urgency of banks to embrace innovation. Her views are not being ignored. All of the UK’s major banks are participating in the latest Regulated Liability Network tokenization trials.
When one thinks of the UK, one thinks of an economy with advanced payments. After all, its faster payment systems launched in 2008, and most people make contactless retail payments. However, Ms Breeden highlighted that these retail payments predominantly use cards. That contrasts with India’s UPI, Sweden’s Swish and Brazil’s Pix, which use bank deposits directly.
“I am firmly of the view that the technology revolution will hit – indeed, is hitting – finance in the way that it has hit other sectors of the economy,” said Ms Breeden. “It strikes me that, for banks (as the incumbents), payments innovation is both a first-tier opportunity (given the potential benefits for them and their customers of additional payments functionality) and a first-tier threat (given the risk of disintermediation by new players). That in my view demands urgent action.”
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