At the Innovate Finance Global Summit 2024, Sarah Breeden, Executive Director of the Bank of England, outlined the institution’s measured yet optimistic stance toward the rapid innovations occurring in payment systems. Breeden highlighted the Bank’s twin roles as regulator and participant in the UK’s financial infrastructure – a position that demands fostering innovation while safeguarding public trust.
“The payments landscape is undergoing a seismic shift,” Breeden declared, “driven by technologies like distributed ledgers and tokenization. These have the potential to make payments dramatically faster, cheaper, and more secure for both businesses and consumers.”
Sarah Breeden, Executive Director of the Bank of England
The Bank, Breeden noted, is particularly interested in the potential of these technologies to streamline wholesale payments – the high-value, often cross-border transactions that underpin the global economy. She also stressed that a regulatory framework adaptable enough to handle such dynamic change is essential, referencing the Libra stablecoin proposal as a pivotal moment that spurred necessary regulatory rethinking.
To address these complexities, the Bank of England will release a Discussion Paper this summer, soliciting industry-wide feedback on how to improve payment processes and create a welcoming environment for innovation within a secure regulatory framework. This collaborative approach, Breeden emphasized, exemplifies the Bank’s commitment to shaping the future of finance with the insights and expertise of the private sector.
The potential issuance of a retail Central Bank Digital Currency (CBDC) was also a key theme. “As cash usage declines,” Breeden explained, “a CBDC could ensure that the public continues to have access to a safe and trusted form of central bank money.” This exploration aligns the Bank of England with a growing global trend as central banks seek to understand the potential of this new form of currency.
Breeden concluded her address by noting the Bank’s active involvement in international collaborations like Project Agorá, highlighting the importance of global cooperation in addressing issues of efficiency and regulation in cross-border payments.
“Breeden’s speech strikes the right balance between caution and anticipation,” observes payments analyst Dr. Lisa Moyle. “The Bank of England clearly recognizes the transformative potential of these technologies but is also underlining their responsibility to ensure safety and stability remain paramount.”
Key Takeaways
- The Bank of England is seeking a balanced approach to payments innovation to bolster efficiency and security.
- The focus is on wholesale payments and their impact on financial stability.
- Collaboration with the private sector is seen as vital for future regulation.
- A potential UK CBDC remains under consideration.
- Global coordination is emphasized in addressing cross-border payment challenges.
