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In Focus Risk


Setting the right data standards


Setting a framework for regulation throughout the data revolution


Dave Ramsden Deputy governor, markets and banking, the Bank of England


The renewal of the RTGS service is an opportunity for the Bank of England to influence the future of data from the heart of the UK economy. To play our part in the data revolution we are using this programme of investment in critical national infrastructure as an opportunity to set data standards nationally and drive them internationally. Infrastructure change does not happen


very often – our current RTGS service is over 20 years old. But when it does, it is a foundational change – not least because, as the central hub for payments in the UK, everyone talking to it needs to speak the same data language. Across all of these services, the data that


are used, and the way they are formatted and presented to users, is vital. And because the standards we are implementing are used internationally, there is a critical need to ensure we implement them well. But many of the data standards currently


used across the payments chain are either a legacy standard or not a standard at all – a bespoke format originally created for an internal processing system a generation before the internet. In today’s connected world, there are huge benefits to be gained from the whole payments chain moving to international standards which, when implemented properly, provide a seamless flow of data from one end to the other. Enter the standards produced by the


International Organisation for Standardisation (ISO). Across technology and manufacturing it has produced over 24,000 standards for business and government to follow. I am going to focus on two – ISO 20022 and how we plan to implement it for payments


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Beyond the migration, there will need to be an ongoing evolution, development and enhancement of ISO 20022 and payments data in the UK


in the UK, and also ISO 17442, more commonly known as the Legal Entity Identifier – an important tool that can be carried within an ISO 20022 payments message.


ISO 20022 consultation Given its characteristics, data standards are one area where we, as the bank, can only do so much on our own. In June 2018, together with the PSR and Pay.UK, the operator of the retail payment schemes, we launched an ambitious consultation on our vision for implementing ISO 20022 in the major UK payment systems. I am pleased to report that, as outlined in


our Consultation Response Document, we received wide and consistent support for our proposals. We will be going forward with implementing ISO 20022, via the introduction of the Common Credit Message or CCM – which is central to message harmonisation across the UK’s main interbank payment systems, as well as providing compatibility with the emerging international consensus. The bank’s direct responsibility is for the UK’s high value payment system, CHAPS,


www.CCRMagazine.com


so we will be working closely with Pay.UK as we develop the CCM. But success will also require ongoing input from across the whole payment chain. It is important we implement this change


effectively. Both to mitigate the risks that migration brings, but also to ensure we capture this opportunity. I want to emphasise that we must not think of the ISO 20022 implementation as one-off change, to be left untouched in the UK’s payment systems for years and allowed to become outdated. Furthermore, we must work hard to


ensure that our implementation of ISO 20022 is not just inwardly focused but internationally harmonised; international co-ordination will be key to unlocking the potential benefits for users of payment systems globally. Beyond the migration, there will need to


be an ongoing evolution, development and enhancement of ISO 20022 and payments data in the UK. We must keep this in mind as we implement the standard; and indeed start thinking now about the opportunities that the UK’s implementation of ISO 20022 – and the CCM – may unlock in five to 10 years’ time.


Legal-entity identifiers To seize the opportunities for future improvement, we need to examine where there might be existing inefficiencies. Huw Van Steenis is currently leading a


major project in the bank, Vision 2030, to map out what the future of the financial system might look like and the role the Bank can play in making the system as effective as possible for households and businesses in the UK.


February 2019


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