Bank's consultation on supervisory approach to wholesale cash distribution – December 2022 – Bank of England

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The Financial institution of England outlines the way it will use new powers to make sure wholesale money distribution stays efficient, resilient, and sustainable into the longer term. This can underpin continued retail entry to money for companies and people.
The Financial institution has as we speak revealed a session on its supervisory strategy to wholesale money distribution. This units out how the Financial institution would use new powers contained within the Monetary Providers and Markets Invoice to make sure wholesale money distribution stays efficient, resilient and sustainable into the longer term to help retail entry to money within the UK. The Invoice is at present earlier than Parliament.
Regardless of declines within the transactional use of banknotes and cash, money stays important for a lot of in society, and performs an essential contingency function for everybody within the occasion that different types of cost are unavailable or interrupted.
The declining use of money can be placing stress on the wholesale distribution system, which in the end underpins retail entry to money.  The present wholesale money distribution system was designed for a world with larger money utilization. Money processing volumes within the UK have fallen virtually 50% since 2016. These declining money volumes have triggered inefficiencies which are placing the UK money infrastructure below stress, creating dangers of disruption to shoppers and companies who want entry to money. Rationalisation is critical to make sure the longer term viability of the wholesale distribution system, nevertheless it offers rise to dangers which should be managed successfully.
In April 2022, the Authorities revealed a coverage assertion recognising the potential dangers to the sustainability of the wholesale money infrastructure. It introduced its intention to provide the Financial institution of England new powers to make sure the longer term effectiveness, resilience, and sustainability of the wholesale money infrastructure. These new powers are contained within the Monetary Providers and Markets Invoice, which is at present going by means of Parliament. The Invoice additionally comprises complementary provisions on retail money entry providers which might be below the Monetary Conduct Authority’s (FCA) remit. Collectively they’re meant to safeguard entry to money throughout the UK into the longer term.
The session revealed as we speak units out how the Financial institution intends to make use of its new powers in a proportionate and risk-based option to obtain this intention. These proposals cowl:
As well as, ought to a systemic entity emerge within the wholesale money distribution market, it will likely be topic to a prudential supervisory regime, much like the one which at present applies to systemic cost programs. It’s because such an entity might pose dangers to monetary stability and the boldness within the UK monetary system. Our proposed strategy to prudential supervision of a systemic entity within the wholesale money distribution market is printed within the session.
The Financial institution’s Chief Cashier Sarah John mentioned:
“As we speak we’re setting out how we plan to make use of new powers given to us by Parliament to make sure wholesale money distribution stays efficient, resilient and sustainable into the longer term. This can assist underpin continued retail entry to money for enterprise and people within the UK for years to return.”
The Financial institution welcomes suggestions on the proposals set out within the session. This session closes on Friday 10 February 2023.

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