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This consultation paper is informed by an outreach programme launched in January 2016 by Minouche Shafik, Deputy Governor for Markets and Banking. A dedicated review team has met with current users and potential future users of the service, authorities, payment system operators, experts, and broader public interest groups. These stakeholders highlighted five key requirements for the next generation of RTGS system. These are that the service must:
Stakeholders agreed that now was the right time to develop the next generation of RTGS. They strongly encouraged to continue to make safeguarding the payments system’s overall stability as primary objective, through a highly reliable, resilient and robust method of providing real-time gross settlement in central bank money of the largest, most system-critical payments in the economy.
Proposals that are consistent with both this primary objective of protecting the payment system’s stability and enabling financial innovation, efficiency and competition were chosen. This is aimed at contributing to the UK’s medium-term economic prospects and safeguarding financial stability by reducing market concentration, identifying new risk-reducing technologies, and increasing the scope for electronic settlement in central bank money.
Proposals are aimed at delivering a new RTGS system that is resilient but flexible, with a high proportion of payments in the UK economy continuing to take place in (or backed by) central bank money, however the structure of financial markets and payments technology develops. Proposals are intended to provide broader access, higher resilience, greater interoperability, and a wider range of user functionality compared to the RTGS of today. These proposals are set out in full in the consultation paper.
Andrew Hauser, Executive Director for Banking, Payments and Financial Resilience, said: “The world of payments is changing rapidly, and central banks need to keep pace if we are to deliver our mission of monetary and financial stability effectively in the years to come, whilst also enabling innovation and competition where we can. The proposals in this consultation document set out the changes the Bank of England believes are needed to deliver a new generation of RTGS service to meet that challenge. Taken together with prospective reforms to retail payments underway in the industry, these changes are designed to keep the UK payments infrastructure at the leading edge globally whilst underscoring our commitment to maintaining stability and confidence.”
Responses to the consultation must be submitted by 7 November 2016.