HM Treasury has published its policy statement on protecting UK wholesale cash infrastructure. The government intends to create an oversight regime which will:
- give the BoE oversight over, and the ability to regulate, the market activities of the wholesale cash industry to ensure the effectiveness, sustainability and resilience of the system; and
- give the BoE the ability to prudentially regulate a systemic entity in the market, should one form in the future, to manage risks to financial stability and maintain confidence in the financial system.
Entities will be designated as being within scope of either or both parts of the regime:
- in relation to market oversight, all entities which provide wholesale cash activities or provide financial support in relation to these activities, could be brought under the regime. Treasury will also have the power to designate a critical service provider to the industry under the regime, if required; and/or
- the prudential regime would apply only where an entity was deemed to be systemic, in that their failure or disruption would threaten financial stability, and they are not already subject to sufficient alternative prudential regulation. Wholly owned state entities would not be in scope of the prudential regime, given the nature of their governance and financial support.
The government intends to legislate for the oversight regime when Parliamentary time allows. The policy statement also confirms that the government has carefully considered the responses received to its access to cash consultation and will set out next steps in due course.