18 October 2017
visit www.response.ncr.com

Bank of England warns on payment system risks

30 November 2000  |  3472 views  |  0 london

The Bank of England has warned the Government of potential risks to the financial system from uncontrolled competition in payments, and of the dangers arising from technological dependencies.

The Bank issued the warning in a paper decribing its work on the oversight of payment systems. It follows a report by Don Cruickshank which identified bank control of money transmission services as a potential disincentive to new entrants. The Government has warned the banking industry that it will introduce legislation to stimulate competition in the payments industry.

The BofE states in its paper: "Risks in payment systems need to be identified, measured, monitored and controlled. The public policy interest in reducing risk may be greater than the sum of individual interests of members. Even if members are keen to reduce risks in a system, they may be unable to make the necessary changes because of difficulties in co-ordinating action among themselves."

The Bank also outlines its concerns that the increasing dependence of the whole financial sector, including payment systems, on IT and telecommunications networks gives rise to an increased exposure to hardware and software failure.

It says the work on Y2K has encouraged a wider debate among market infrastructure operators about the different kinds of operational risks and the adequacy of back-up and disaster recovery plans.

"Reducing operational risks means addressing technical reliability and redundancy, back-up facilities and contingency plans, security measures and internal controls," the Bank states.

The Bank also points to common dependencies on a particular technology or supplier which might constitute a single point of failure for several different systems. It cites bank dependence on the Swift messaging network as a particularly potent example.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Banks face $150 billion payment threat

Banks face $150 billion payment threat

22 November 2000  |  3422 views  |  0 comments
European banks take Step1 for retail payments

European banks take Step1 for retail payments

17 November 2000  |  3643 views  |  0 comments
European Commission to crack down on payments

European Commission to crack down on payments

10 November 2000  |  3926 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.innotribe.comRegister nowvisit www.vasco.com

Top topics

Most viewed Most shared
Ripple looks to drive bank adoption with $300m XRP rebate programmeRipple looks to drive bank adoption with $...
15136 views comments | 12 tweets | 4 linkedin
Swift positive on blockchain, but big challenges remainSwift positive on blockchain, but big chal...
8353 views comments | 15 tweets | 21 linkedin
hands typing furiouslyHow artificial intelligence can deliver a...
7853 views 0 | 7 tweets | 9 linkedin
satelliteGates Foundation backs Ripple collaboratio...
7273 views comments | 13 tweets | 8 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
6431 views comments | 8 tweets | 16 linkedin

Featured job

to £70K base, £105K ote, benefits
London, UK

Find your next job