Speech by Andrew Bailey on Innovating for the Public Good

I am delighted to be participating in the City UK Annual Conference, where I will be focusing on the theme of innovation and its role in public policy. Specifically, I will be drawing upon our recent work on payments and digital currency, including a significant paper we published last week. As public policy makers, it is crucial for us to establish clear guidelines that innovation must adhere to in order to serve the public interest. While innovation has the power to challenge existing rules and prompt necessary adaptations, it is essential that it does not disregard the public interest entirely. Ignoring the public interest in favor of unchecked innovation is a risky approach that is unlikely to yield positive outcomes. Therefore, it is our responsibility as public policy makers to take the lead in defining these guidelines and remain open-minded about how they can be adjusted to changing circumstances. This necessitates early engagement, which is something we are actively pursuing in the realm of digital currency. It is important to note that playing catch up with public policy is not a recipe for success. Although this process may involve elements of tough love and dashed ambitions, I am confident that it will ultimately foster a robust form of innovation. Furthermore, by outlining the principles of the public interest and demonstrating how they can be implemented in the context of new innovation, we can effectively address the perennial challenge of financial regulation. It is inherent to the nature of innovation that while some ideas succeed, many others fail. In the world of finance, dealing with these failures raises public policy concerns. It is not uncommon for central banks and financial regulators to be accused of being anti-innovation and indifferent to competition due to the messy outcomes that winners and losers experience. However, it is important to clarify that we are not against innovation or competition. Rather, we strive to manage our sphere of influence in order to achieve our public policy objectives as mandated by Parliament and continuously serve the public interest.

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