By Emma Carter of the Bank’s Customer Banking Division.
The robustness of payments infrastructure, and the associated ability of payments to flow seamlessly, is an important contributor to financial stability. The United Kingdom’s payments infrastructure has historically proved to be efficient and robust. But, in a situation where a bank is in difficulty or fails, the need to ensure that customers can continue to make and receive payments may become challenging. This article draws together and discusses some of the issues in the way that UK payments and payment schemes work in stressed scenarios. It highlights some possible enhancements which could help to achieve minimal disruption to payment flows in the event that a bank gets into difficulty or fails — a subject the authorities, payment schemes and banks have been addressing in recent months. It looks at elements of recovery and resolution planning from the specific perspective of retail payments.
Considering the continuity of payments for customers in a bank’s recovery or resolution