 So, yeah, it will be coming up to three. Oh, I have. Oh, and welcome to today's discussion. We're going to be asking about the financial future of Britain, and what is best for it, I guess. So, what is the formal... The formal... Have we got up there? Yes, I did that fine. And we're very pleased to welcome a great panel today. We've got with us John Glenn, Conservative MP for Salisbury, also the Espionage Centre of the UK, I think, in terms of questions by... Can you deal with that? Former City Minister at the UK's longest-serving economic secretary to the Treasury. John will have to leave at 3.30, so we will try and get questions into him earlier on. Also here is Martin Kerslie, Director of Directive Banking at the Post Office, and David Hale, Head of Public Affairs for the Federation of Small Businesses. So, thank you very much. And Fran, obviously, what is your... This is the one I didn't actually learn. What is your official title? There you go. Fran could do our own introduction. Passing on to you then. Great, so, yeah, we are a non-profit looking on money and banking that serves society, and our starting point is that, you know, no matter who you are, where you're from, what you do for a living, everyone needs access to money, to buy food, make payments, pay rent, mortgages. So, money is really a key tool for a modern functioning society, economy and democracy. And we need the banking and investment infrastructure to get money to where we need it, smaller medium-sized businesses, support for our high streets, access to face banking for those who require it, and critically to finance a green transition. But we're over a decade on from the crash, and we're not where we should be in terms of finance, money and banking. We've got less than 5% of new bank lending, going to our smaller medium-sized businesses, which support 60% of private sector employment. We have banks rapidly disappearing from high streets, taking with them crucial face-to-face services that millions rely on, including access to cash. And the UK's biggest banks, Barclays and HSBC, have poured $300 billion into fossil fuels between 2016 and 2021 in direct contradiction with the Paris Agreement. We have 11 million people falling behind on bills, credit card borrowing is rising at the fastest rate in 17 years, household debt is rising, putting financial stability at risk. And on top of that, we're in a recession and the pound falling means the cost of imports has been going up. So on all these fronts, we're seeing market failure, we're seeing a lack of provision of basic financial services required for a domestic economy. We're seeing financing of our over-dependence on fossil fuels leading to price stability, inflation, and with huge economic stability risks. But there has been some progress since 2010 under the Conservatives that have been set in the right direction, post-crash regulation, giving the Bank of England financial stability mandates being critical. Recently, the former Chancellor of the United States, giving the Bank of England the climate change mandate, the green finance strategy, levelling up agenda. Also, it hasn't always been the substance that we might hope for. Starting these conversations has been a critical step. I think it's fair to say that progress is now at risk. We've heard things like the green finance strategy that was planned to be published this autumn, could be delayed, there's concern it could be weaker, and concern that we've seen that commitment to making London the first green financial centre won't be upheld. And earlier in the month, we heard the Chancellor of the United States talking about the fact we want a big bang 2.0. This threatens to wind the clock back on to pre-crash financial deregulation. So looking to add the international competitiveness objective, we've seen the city and the government looking to double down on an economy that serves global financial markets as a priority rather than supporting small businesses, communities and the green transition. And even the competition and markets authority have raised the alarm on competition and banking. We have five big banks that account for 70% of total banking assets, and they are still obviously too big to fail. And a competitive misadaptive might address that. It will rewind the clock. And it's not just civil society who've been raising the alarm on this. They've been criticised by the Treasury Select Committee, regulators, even industry heads such as the CEO of Lloyd's. But where are the opportunities? Which we also want to talk about today. So one area is the Bank of England, as well as other central banks globally are exploring how a digital version of cash could be introduced. And we see this as a real opportunity to bring about a safe, secure payment system with universal access and a huge opportunity for increasing financial inclusion alongside protecting cash as well. Card fees operate like a regressive tax on small business and their customers. The smallest business is paying four times the biggest businesses per transaction. So a digital version of cash could help level the playing field on payments between the largest and smallest businesses. And we're interested in exploring a potential front end like the Post Office that could help to enable a digital version of cash to be accessible to small businesses and customers alike. Additionally, we do need to think about banks that want to get lending and want to get financed to those small and medium-sized businesses. Our biggest banks, it's not in their business model. And so we do need to think about new banking infrastructure, mutual stakeholder banks with interesting communities and regions. And there is support for this from some corners of the Conservative Party and some Conservative MPs. But there is also a lot of political support for maintaining the status quo. And that's just the way it is. However, at the same time, Conservative MPs do talk about wanting to get that finance into small and medium-sized businesses. But big finance is really the most powerful voice we have in Westminster. It's by far the biggest lobby group, the most powerful, and it does drown out other interests. A report we released earlier in this year highlighted aspects of this, looking at direct financial ties, the role rolling door in maintaining the public sector and access to the Treasury. So we want to see Conservatives and this Government address some of the issues I've spoken about today and we'll be looking at the upcoming Financial Services and Markets Bill. And the key areas that we want to encourage conversation and hopefully change are abandoning the what we would say dangerous proposal of the international competitiveness objective. We think it's critical right now to give regulators a new statutory objective to align the financial system with 1.5 degree goals. We need to give regulators that responsibility on guaranteeing basic financial services to help the millions of people that are excluded. And we want to ensure that we clamp down on unparalleled influence of big banks and financial firms over politicians, government, governments. I won't go on but as you can see there's a lot to discuss and I'm really looking forward to the conversation today. Thanks Brian. I just realized I failed to introduce myself. I'm Isabella Kaminska. I'm formerly of the FT and now heading my own enterprise, my own small business. So I can suddenly empathize with small business owners. But let's crack on because I'm surprised by some of those remarks. I mean having been intimately involved in financial services over the last four and a half years as the government's minister, the longest serving city minister I'm very happy to address some of the factual errors in what's just been said I'm afraid because we've done a massive amount on financial inclusion and I shall go through all of that and what the legislation that's before parliament now that's about to go into committee stage probably being delayed for a few weeks will seek to do. Financial services is a massive part of our economy. We might not like that, we might want to say we wish we had more manufacturing and we don't like the centrality of the city but it is a core part of our economy and it drives a massive amount of jobs, 1.1 million 2 thirds of which are outside of London. And what the financial services and markets build does is deal with the reality that as we came out of the institutional framework of the EU, we need to find a way of regulating financial services responsibly, right sizing them using the freedom that we have, whether we wanted it or not as a country outside of the institutional framework of the EU to do things responsibly. I have never and always said when I was a minister that we mustn't deregulate for competitive advantage. We must have sound and strong regulations and that guided me in everything I did. I resisted a primary global growth and competitiveness objective because I thought that would be unsound for markets where the PRA and the FCA need to exhibit strong and high standards. So we have a secondary global growth and competitiveness objective behind the obligation to have sound markets governing our institutions. But I also recognise that banking used quite considerably because consumer behaviours have changed quite considerably and Councillor Haskell-Hock who is my constituent would know that when we've seen bank closures in Salisbury the reason that's happened is because people aren't using the bank branches. They're using apps they're using other ways of dealing with their finances and they don't need to go into a physical branch. But I've always been acutely aware that we need to make provision for the most vulnerable in society and that's why the legislation before Parliament including an absolute guarantee of the maintenance of access to cash across the country. We have used and put in 380 million over the last 10 years to support the network of 11,500 post offices to take on core banking services. 99% of individuals banking needs can be met through this network and 95% of business banking needs can be met through that. But where I agree with the previous speaker is around the need to diversify provisions. So I've invested a lot of time working with mutuals, working with Apple, the trade body for credit unions and the bill also makes provision for extended services to be offered by what will probably will be the largest credit unions. I also got Ron Leaffer to do a review of Fintech which we accepted all these recommendations last year to drive forward innovation because it's absolutely right that Fintech will be able to gather better data to verify people's credit worthiness so they can access more affordable credit and not be subject to either illegal or very high cost credit or be excluded from mainstream finance. We have basic bank accounts which are an obligation of the biggest banks but there is still more to be done and when the other areas I've worked on was financial inclusion a financial inclusion strategy working with the former pensions minister and that's really really important as well because that means actually addressing the poverty premium that people feel and see in reality not being able to access insurance getting housing associations to work better to get better premiums on house insurance across estates and indeed enable them to offer more financial services because they often are a reliable relationship with tenants but there is obviously always more to be done. No government minister, no matter how long they've served in office would have answered everything. On the green finance the UK is generally acknowledged to be the leaders in green finance as was acknowledged which is soon at COP last year made us the intention for us to become the first net zero lined centre and that will continue I've no doubt because what it means is that companies will have to verify how they're going to get to net zero by 2050 create real accountability at one of the world's largest financial centre for green finance in London we did green bond issuance of 16 billion and we also did premium bonds on green as well so I'm always keen to explore how we can get banks to open up and provide more financing than mainstream banks to SMEs but banks are not charities they have to rely on business cases we are seeing an opening up of alternative financial provision from different providers. I do want to see credit unions and FinTechs taking a larger role and I think mutuals also have a role to play but banking does remain a very strong industry I'm pleased to say in this country we need stable strong regulation underpinned by that secondary growth compared to be subjected and I think that will set us fair going into the future thank you very much Adam Martin thank you very much thank you Bella I suppose from one perspective we are what you might call a simple retailer with our 11,500 branches that John referred to a moment ago and we are pretty much at the sharp end of what's happening in change probably at once in a generation change in the banking infrastructure we all know that many back branches have closed, many thousands since 2015 and as John mentioned a lot of that is to do with how we all use banking services we use apps and we use digital currency we use digital forms of payment more increasingly so over the last three or four years as we've been physically separated so the role that Post Office has been proud to have taken on is support for every community across the country we arranged a banking framework some years ago whereby pretty much every UK bank customer can now visit a bank for any of their what we might call basic cash for citizens so we are extremely strong supporter of the access to cash to base and the access to gender and John has been very generous with his time he's visited everywhere from the Highlands and Islands planning a plane on a beach to go and visit one of our very remote post offices right way through to visiting our latest banking company which are a new model whereby we can share access to cash through the Post Office counter facilities with a shared environment whereby different bank representatives can meet with their customers it's a hybrid way in which bank customers can once again have the kind of face-to-face support that you need especially dealing with some of the real challenges that people are facing across the living crisis with wanting to make a move from cash potentially into more digital ways, standing orders, direct debits even sort of international money transfers people don't feel enabled yet or empowered to be able to do that online so therefore to come and talk to somewhere about it is a huge thing for them we're delighted to be running those banking hubs there are another 25 in the pipeline now on the way to potentially some hundreds of over a few years so that shared utility model supports everything we've done through the banking framework it supports access to cash for those who need it the most let's face it it's not just about the need many people just want to use cash it's an essential part of their weekly budgeting anyone who's had to feed schools with dinner money or charities with contributions and so forth people use cash and I think the SCA recently said that some of that 60 to 70% of people use cash at some point through every single week so even though we are talking about a move to a more modern facility central bank digital currency union 1 I think the requirement is on all of us the owners is on all of us to make sure that the migration from physical to digital cash is done in a controlled way leaves no one behind fully utilizes something like a state owned facility like a post office to be the arbiter and front channel for every one of those services so we're delighted that we can help make a move from physical to digital we have a very strong role to play in every single community and we know from our experience with banking hubs when money stays in the community when money spends in the community it stays in the community as soon as you move cash away from town A to town B town A is going to suffer that's just a factor and a high street is under more pressure than it ever has been before so here we are as a retail right at the front end the sharp end of all these changes that are happening in the banking infrastructure we're delighted to see government support we think that has to be really driven home hard and it's not just about access to cash I'm sure John and I hope you agree with this but it's to do with the full cycle of cash getting it out into individuals' hands vulnerable or not is one part of the picture getting businesses to accept it and there's plenty of evidence that something like 15% plus of small businesses sorry 15% of the revenue that should go to small businesses from cash has been missing because businesses are saying cards only please once those businesses stop taking cash that's we're moving to a de facto cashless society so getting businesses to accept it and then the main thing being that there's somewhere simple for those businesses and local for them to pay the cash back into the banking infrastructure that's really where the post office comes in so I think that cycle is incredibly important thank you Martin, I'm sorry to rush you I do want to get some questions in your job so David quickly I don't mean to censor you in any given form but we do also you want to mail me before I leave exactly, I think that's fair I promise to leave plenty of time I think that's good I agree with a lot of what John and Martin said I guess just to pick up on the last point I think from a small business perspective what is really important with the changes that we've got in cash unless people are using cash is just a practical question how can I take the cash that I've got as a business and deposit it somewhere in a safe and reliable and convenient manner it's often a bit more of a human question so if you have a kind of 10 mile round trip in a rural area to deposit cash you're less likely to do it frequently that means you're carrying more cash that means you're more of a type of a crime there's those kind of concerns that come in as well as just the what are the coffees that I'm doing am I having to pay more than a large business for coffees etc it is a practical human question with consequences that don't sound like they relate to access to cash and finances like with crime etc and we see that in particular in terms of profits and their taking they often get cash again just to be quick I think it is changing very fast how how people pay I think small businesses are changing with it I think the pandemic has increased appetite to change faster with digital payments ultimately businesses will be led by their customers and where their customers go and what their customers want to pay you know it is likely that there will always be a floor of people that want to use cash it is likely it is for the foreseeable future and it is likely that that will be particularly the case in deprived areas and rural areas and then I guess finally on financial and access to finance I think banks have done quite a lot of work in making sure that their personal banking accounts work well for particular groups that are marginalized whether through health conditions or whatever and I think it is important as we look to the future that that will also extend into their business banking so that we get people from all walks of life who want to start a business that we can read across from the elevation that has been done on personal banking into business banking and make sure business banking isn't as inclusive as possible and that is how we can get more people starting up business as well in every corner of the country but I will let you question John brilliant so we will crack on some questions from the audience whoever waves at me most enthusiastically as this gentleman here at the front row and two others will pull three questions together very enthusiastic any other people yes ok 1, 2, 3 and we will pull them together and then you can package the answers so this is for David being the Federation of Small Businesses you may know about the Landers Bank and the Smart Cows and I think it is about 40% of there about of German bank and this is generally recognized as one of the strongest features of the German economy sorry are your questions for David right mostly or the others can comment yeah but we really want to just focus on John so we will I have got to go in five minutes perhaps sorry to interrupt quick one so there was a regulatory framework talked back by the government about crypto obviously in the future I just wondered if you have heard anything more about that where that is going and if you can see that in the near future so ladies in the middle yeah my question relates to the person who is objective research has shown that you kind of crank the person ok and do you think that the new objective should include the direction to fight and the last gentleman over here when positive money started it was focused on the nation's money created by public authority rather than by commercial banks and I was wondering whether that is still an objective of positive money and whether that makes sense to maybe I can just add to that question at the end I guess it would be interesting to know your thoughts on on a centralized as a digital version of cash obviously you have done a lot of work on access to cash which we recognize and it would be great to have your thoughts on whether you think that this is an important way forward for people to agree with this yeah ok thank you very much so on the crypto issue I made a speech on the 3rd of April we set out a whole set of things the government was doing we were moving to I mean essentially cryptocurrency there is a bit about consumer protection and that is underway with the FCA and the PSR and there is a whole bigger piece around what legal framework how do crypto exchanges work how do you get the innovation that is inherent in the industry into the FCA so that it can be well regulated all of those things will be for my successor Andrew Griffiths to drive for which I am sure he will, I imagine you will make a very early statement on that our aspiration in the UK is to become the leader in crypto in all its dimensions but I have to say the whole application of blockchain DLT to financial markets is complicated the way it will change our regulatory environment needs some really deep thinking and collaboration and that was the spirit of which I was taking that forward and I have no reason to believe that my successor won't do that on the global growth and competitiveness secondary objective and its interaction with the economic crime thing I think there is always an imperative in parliament to put down an amendment to say you are going to do the right to declare an intent but I think we have to go beyond declaring intents and politics and look at the mechanics of what we are trying to do and how we are trying to do it now quite rightly what happened with the sanctions of 1200 individuals I think 120 entities over the last 6 months is a lot of legislative change as well and some of the work that is going on through Bayes in terms of companies house reform and some of the other reforms that are going to tackle some of the sources of economic crime that legislation is ongoing so I don't really think the financial services and markets bill will be the right place to locate that but they do need to speak to each other economic crime and fraud is a changing and really challenging and intensifying problem for this country and I will be taking a close interest in on that from the back benches and working with some of my colleagues who have established APPGs and hopefully use some of the experience and expertise I have had in government to assist them there on that whole matter of a central bank digital currency I gave evidence last November to the House of Lords Select Committee which set out the rationale for continuing to look at that I think there is a great tendency sometimes to get into a situation where we have got to be ahead of everyone else well that is generally good for the UK overall but we shouldn't be doing things that don't make sense because we have a clear business case on wholesale central bank digital currency a lot of that is already happening through the clearing system that exists through the bank I don't think a retail digital currency is going to happen anytime soon if it does it will be in the second half of this decade but there is a lot more thinking and work to be done and I think the bank will be publishing Sir John Cunliffe is the leader in thinking about this and we will respond to that in due course Thank you very much since you have been so efficient one last one from me I was recently in a press briefing by central bankers and I was asking them who is really responsible for engaging with the public regarding CBDCs because I think there is a lot of anxiety in the public especially with respect to privacy central bankers are being very technocratic about it and saying we are just following innovation and it is really up to the governments to engage the public what level of engagement do you encourage and has there been enough of it what is your perspective when we get to a point where we have decided whether we are going to take it forward then we will be in position to determine what is the engagement not if we haven't decided what we want to do it it is a concept that is out there it has a clear application in the wholesale sense but I am not sure it does in the retail sense the UK's payment systems are much better than the US's lots of countries at the stage are thinking through whether they want it and how it would apply but we haven't made a decision of whether we are going to do it it seems odd to consult on something we haven't made a policy decision of whether we are going to actually do it so as I say that will be something the government will need to come forward with in the next 6 to 12 months thank you very much so we kind of cut you off a little bit so maybe we oh shall we take some more questions and then do the discussion sorry just to play the tape again Sparkhausen Landersbank German municipal banks probably backed by the government I am not absolutely certain about that I don't think they need to be but nevertheless the big thing for them is that they back local banks they are municipal banks they are back in the local business and they are exactly what was said just before which is that they are in the business of lending out local money to the locality keeping it in the locality and it's not going out but it's not going abroad and it's not even going going to the big five as it does here it's a win-win-win-win so my question is is this is the Federation of Small Businesses in the business of encouraging the formation of local banks to that end and maybe others can discuss this and do they see any downsides to following the Landersbank and Sparkhausen the Bank of South Dakota those sort of local banks so absolutely in terms of Sparkhausen and the German system the major map there that clearly works well that only downside is how easy is it to read across from what they do in Germany to getting it looking more like that in the UK but I think that's the challenges how can you get that sort of local finance and more manufacturing centre that's some tricky economy but how do you get that and put that into place in the UK I think is a really good question to ask you just have to start one I'll see if we're I can speak to a few of those points I think that the kind of disappointing thing is that there is kind of a cross-party agreement that the UK's banking sector is too concentrated and actually we need more diversity and we heard John talking about me for mutuals and your support for credit unions and obviously the German system you mentioned like does this very well with the Sparkhausen who are kind of regionally located and then they have the big KFW the national investment and you know those big things I'm missing so I think how it's really about how do we get this to the next stage and what I would say obviously John disagreed with me but I think it's gone but I think it's important to say the international competitiveness for the UK banking sector the regulators have been warning against this and if we kind of have this step towards deregulation then it kind of puts more strain on the financial stability risk and actually it takes regulators away from the need to create an environment where we can actually have new entrants onto the market as I mentioned the competition amongst those who think we need more competition we need more banks basically doing different things so that's our concern and you know there is cross-party agreement for a more diverse ecosystem of banks we need to kind of push this forward with that kind of reality of what that means in practice and I guess just to pick up on a few other points I think the current point is really important I think it does have a place for discussion in the financial services markets and I think in terms of you know crypto and as we heard from John like wanting the UK to be a leader I mean it doesn't really have a public I don't see any crypto currencies with a public purpose objective with a kind of with something that's socially useful with a monetary currency for everything well exactly but what does it do to help anyone about or make them lose their life savings so I think there is real concerns around the rhetoric of the kind of conversation without that kind of tangible how is this going to move how is this going to make us have an economy that is you know more supported of smaller medium sized businesses that seems to be where there's a lot of consensus in the room today and you know just to pick up on the kind of central bank digital currencies point of digital cash point and if you're questioned you know the payment the aspect of needing to make payments is critical to modern life like we kind of need to have access to electricity and water we need to have access to making payments so the idea that there isn't a use case for you know public payment system with a new I don't want to call it a CVDC anymore we're calling it digital cash I think is really not seeing the kind of whole of what it means to live in the wrong economy so the idea that we should just have digital cash to facilitate the wholesale market is really missing like a big part of the future of finance which is isn't just saying how do we protect the access to cash you know that's really critical but it's also about how do we have a payment system which is universally accessible which puts a level playing field for small businesses big businesses or citizens that live in rural areas citizens that live in urban areas and kind of helps us on move forward on the same page whilst protecting the use of payment which is really critical you know part of the reason we have such instability in our banking sector is obviously one of the big banks that comes in silver they pull the payment system down and that's a really unstable sound system so by actually having a payment system that's separate I think that there's a real opportunity but Fran wouldn't you say and this question goes to anyone else who wants to chip in, like this week has proven like I think there's been it's been an interesting week in markets last week as well obviously but there was a resilience in the market we are still here, payments are working it wasn't too, lots of people feared it would probably be 2008 and maybe touch but I don't know what happens next week but it does seem like the whole post 2008 regulatory environment is having an impact so we have banking resolution now we have all these capital buffers banks are unlikely to kind of collapse the payment system in these days the way they were more likely to do in 2008 it's more likely they just like die a very slight death and see you know that's what we are, do you think that changes the framing for your kind of opposition I mean I think obviously what's just been happening is very very different 2008 we have uncertainty in the long term government bond market speaking also about like Credit Suisse and Deutsche Bank they managed to kind of survive these terrible rumors last week about their demise but looking to the future we want to think about what is what does the kind of infrastructure ecosystem look like for a money banking financial system that does support the economy in terms of as we've talked about this kind of real levelling up agenda small and medium sized businesses a green transition and those things just aren't fit for purpose and I do still think that looking at the payment system as a kind of important public utility is kind of critical to us getting a more stable system but I realise I've spoken a lot so I'm going to bring in others and the audience yeah we've got loads of questions here already pre pre written here from the public but I want to bring in a small bit I'll come to you specifically what is the problem facing small businesses these days why is the current payment infrastructure not fit like why would you need a public good CBDC how can it improve small business what is I mean it's a huge amount of problems specifically on payment there's a few things one there's just the level of power base that they have to pay two there is the additional expense that comes with handling less cash than previously but still having to deposit it in the same way and with less infrastructure than we used to have that's interesting could you expand on that so essentially when you had what small businesses had to deal with more cash flow there was an economy of scale and yeah whereas that's gone now so you have to basically do the same amount of queuing cash in the bank but for less money there's practically exactly the same costs for handling a small amount of cash compared to a large amount of cash and that is the that is the penalty that comes with less use of cash and that is especially the case if at the same time as handling a lower amount of cash with a similar level of cost you are also having to some businesses get scripted with the card system for the first time obviously the same fees increase in lots of areas so that extra cash the extra costs on top of each other do you add up where there is that there are learning costs as well as well as the kind of data from that to the plastic one what percentage of small companies and maybe you might have some idea of holding out with respect to digitalism so I think there's very few cash only businesses my growth is down my road converted that was the last one during the pandemic certainly on some of the seaside resorts the same cash and no cards and I think the second don't mention the increase in card fees and the increase in dependences on cards so there is always a balance to be drawn about carrier handling cash recognising as David says that to bank smaller amounts of it still takes the same cost but that problem is about to get worse because of money laundering challenges the FCA has written to all the banks to say please impose some limits on how much cash will take over the counter some small businesses who generate an awful lot of cash are being caught up in the unintended consequences of trying to track bad guys from a local butcher generating maybe from a few to six to seven shots generating 30,000 pounds a week will run into the buffers of limits pretty quickly and the only option for that customer now is to take him to a bank well go and find one as David said not only is the cost of handling the cash in the local community increasing but if you go and drive an hour in return to go and bank your cash at the nearest remaining bank branch the cost has gone up again so the unintended consequence of trying to restrict money laundering for all the right reasons is impacting the small business sector and its ability or inability to bank cash effectively and cheaply so you're going to drive towards a cashless environment by accident and still the back guys will still order money they want to they'll find other ways to do it but you've ruined a number of small businesses along the line because they've moved off cash they've gone to car dependency and those fees will then go up and up and up and you couldn't get to high street Yeah and I guess just to bring back the point of the public payment system is we do have this captioned market right now like card fees are incredibly regressive for small businesses as I mentioned it's literally quadruple the amount per transaction for the business for big businesses so actually like bringing in a kind of a public element a central financial currency or digital cash can really help to disrupt this captioned monopoly that we have which is has huge issues for SMEs As a small business myself I currently take paypal and I take strike but I think the concern is not just I can see what you're saying you need this broader kind of public currency to have a good currency to help with potentially private sector gouging of small businesses but there are concerns I think not so much in western Europe that who do you trust more than kind of private sector operators or the government and when it comes to kind of you know if it is a universal good can we be sure that government will maintain universality because that is really recently we've seen some paypal removing services really nearly based on some might say political agendas can we trust a government utility currency to never unbank people on the same basis I mean I think when you hold people about who they trust more like there really is still very low trust in the private sector delivering financial services right now and obviously we do have a democracy where we vote in the government and actually trust is the number one key aspect of whether a public payment utility works so that's why the way that we think you use it is that you need that operator potential like the post office who already has the trust in the community and so actually it's kind of impossible to to do these you know the kind of dystopian future you're getting at but I mean obviously privacy issues are absolutely critical to this conversation and you know the way that this conversation has been accelerated is what to kind of think about is the it was kind of Facebook coming out to see right he's saying we're going to launch our own currency and central banks getting concerned what does that mean for future of natural stability and so when you look at who is the best player to launch new payment systems that I think the state has a really important role in that and a public utility is critical but we need to have those conversations which is slightly disappointing to him from John that he wasn't interested in having those conversations now when I think that yes the latter half of this decade might seem like a long way away but actually if we don't start to do that now then there's a few risks from our perspective that one it gets captured by the private sector and doesn't really do anything for the SMEs and citizens we've talked about today and two that you know it becomes like identity cards and the trust isn't there so it doesn't get used and then so we do need to start from that and I think there are a lot of sorry man I think in the UK we probably have the most moribund sector unfortunately in Western Europe and I think back to the gentleman's question about Germany Germany is still a massively cash-dominated country and yet they have more innovation towards new ways, new models than the UK that has despite all our drives to a digital currency lender having us but to be fair they also have the biggest scandal in wire card which my team covered innovation can also encourage bad practice I agree but what we have in the UK despite several years of open banking and we've had a number of market changes post 2008 to try and either break up the dependency or it's too big to fail we still have a nascent FinTech sector which has not made any significant inroads into mass services that should benefit the population so I think we've got FinTech itself is maybe a sort of circular economy in its own right it could well be and how do you break that cycle ultimately what we have in things like credit unions mutuals, small organisations that could drive as the gentleman was asking the local investment of the lifestyle in the UK the problem for them is that they have an infrastructure challenge we get that banking and post office trouble too much people like credit unions access to a national branch network is through us so having local organisations that can produce micro loans that can generate small business investment in their own waters in their own local economies is really dependent on infrastructure so we don't have the big banks have been closing their heads so we've just got a problem of general availability and access to financial services that are going to move us on as we go so I think we'll take some questions with the audience but before we do I wanted to pick up on your point about locality and maybe David you'll have some opinions on that too it seems to me there's a bit of a paradox here because by definition the reason people want to use currency is to spend it not locally to be able to spend it online and ship stuff in from abroad because that is I would imagine the number one sort of desire if you can spend it locally you can spend bear a cash face to face so it seems like all that the basics of paying your rent and paying your energy but I don't do that in cash but is that locally that's going to be called for it among the organisations probably in central London just not financially making payments is white I think there was a sort of there was assertion that if you have you want to maintain through the post office you get the money locally you can spend it like when you come out of the post office you spend it in the local news agent it stays local surely there's actually a component there where if you don't have the cash to hand you're more likely to distribute it beyond your local kind of environment I think I might be more a digital currency that may be local and a distant transaction so it's transitioning from one to another it doesn't mean that one is better than the other or the other one failed so there will still be physical cash there will be digital cash at some point as the minister said as we go through this next five or six years we're forging local credit unions to then digitise that and then allow that capital to leak beyond the locality of that credit union that's where I feel there's a maybe a conflict in that vision or I might be being done I don't think so there are plenty of ways in which we can all spend than those who are digitally enabled to spend and buy anything from anywhere in the world so that side of the the payment infrastructure is probably more dependable and then we'll talk about here what the premise is how do we follow that agenda how we want to get small communities all over the country able to have that kind of access it's an extra local kind of access which a digital currency retail based as well as a government digital currency what do you think? Any thoughts on the locality question keeping the money on a local level? I think part of the advantage of talking about credit unions and getting more local finance is actually just about the investment in businesses that wouldn't otherwise be able to access them and that tends to mean the sorts of businesses that would want people to be starting up in more deprived communities getting finance that they wouldn't otherwise be able to get more of that local infrastructure not in place so I think it's more a question of how do you have institutions that are responsive and interested in investing in places that haven't had as much investment as they probably should have done in the last how many years I think it's talked about as a utility but it does interact with the other utilities so you can mention the seaside towns for the reason seaside towns are quite cash dominated is because they have terrible broadband and mobile internet connections and you still see that so it's part of a wider puzzle if you can get people in seaside communities connected to the internet and much more likely to be able to say it's a it's a it's a wider piece of how can we make sure that somebody starting a business in a private seaside town has the same opportunities to access finance and take payment as somebody that's starting a business in central London should we take some questions one from the audience and then we'll take my my prepared one sorry we already had it my question about future finance is really about the great evolution and the return of things like that so I would want to talk about this we've got customers that still don't feel comfortable using it yet so I know the context the technology of things like that going forward future finance about inclusion is an important exclusion when machines go down how it goes with our rural areas it's a great resource then to know what is the path of what is the go-to when some of those things even aren't the local people won't move across to those there's still going to be a large joint society going forward it is a really important question because I personally experienced that a few months ago when we were at a restaurant and the payment went down and we had to pay in cash but we didn't have the cash because nobody carries cash so we had to do good old fashioned IOU and we came back and we paid in later but I don't know how many people came back so how do you how do you hedge for that as a small business I think the question is exactly right I think why cash is so important because it is the ultimate back up if not the first option for lots of people and unless you have that in place you are vulnerable to situations like that at the restaurant I don't know how many people came back and there will be there are people who are very clear that they do not want to do anything but use cash and they are keen to cater for that element of their cash and it is not just somebody loses their card and they need to pay and they tend to go to cash and that sort of thing it is not just people that aren't permanently wanting to use cash for most people there will be a situation in which cash is the best option and if they are not able to then that is going to be a problem that is going to be a problem a very brief anecdote about exactly that situation two years ago maybe a little bit more a small part of the visa network the authorization network went down overnight we saw we shipped out about an extra 100 minutes overnight to ATMs and post offices because the panic that went around about oh my goodness visa has gone down we can't take pains, it was huge and the next day it said that that went down at about 7 o'clock he had to having some effect on his payments then gone online to verify the law none of them worked to then have to go around his pub and ask everybody who had three kinds of cider, two wines, one prosecco you only 20 to quick and you go and get it and so on he said he was damn glad that it went down then because if it had gone down at 10 o'clock at night but everybody left to go and get the cash and the cash so you've got a trust and a reliability and it's possibly a very British thing pay the IOU and we did the right thing we cued from the card as well but you can't rely on that obviously if the system goes down you need the backup and the backup is quite a physical cash currently but if the future is a digital currency and you've got the privacy and you've got the anonymity but you've got the privacy of knowing I've got 50 units that equals 50 pounds an IOU 20 of them I can give you those 20 in a digital currency instantly without recourse to a third party without recourse to an online system somewhere I can just lend you 20 of my digital currency credit and that's equivalent to a two cash and I think that's the benefit that when we can run a system like that that isn't dependent on third party for what transaction and digital currency you're talking about in person transactions so I would just go here for 20 exactly sir I've actually got a card which supposedly does this as an offline central bank digital currency where without intermediaries you can make peer-to-peer transactions so I think often in the debate about central bank digital currency people get confused between like account-based central bank digital currencies which could be abused by governments but also tokenised forms or bare instrument forms so I think if we're worried about privacy we can replicate cash and the key benefits of it in terms of not gathering personal data and yeah this is the kind of thing I'd be interested in seeing Is this not why we need to have public discussions at this point? Before we have the Tories or Labour telling us what flavour of the future we are based isn't that exactly the message that we should because I think the public isn't broadly aware of this and yeah I mean we are trying to facilitate those conversations with the Fike Kingdom, with the Treasury with other departments that have real benefits for parts like DWP in terms of getting benefits to people, increasing them in times of need like we have right now and obviously part of the kind of issue with financial conversations they're not that inclusive so positive money part of our role is to play that role on behalf of civil society that want to see a fairer and accessible system in the future and I think one thing I didn't come on with John but we think is kind of critical is also the regulators having an objective for financial inclusion people might be surprised but at the FCA there isn't any objective for regulators to be holding the financial sector to account for financial inclusion and that's an issue because it tends to be in terms of the gentleman's question like it can be an afterthought right so as we had a few years ago when David Cameron that was a long time ago he was kind of keen to just say we you know out of a kind of global competitive angle should be the first cashless nation without any thought of what that would mean for the people we've been talking about today and so yeah the real risk just as financial inclusion could be an afterthought when it comes to financial regulation is that when we talk about digital cash we're not really talking about the best user case in terms of individuals and as we've heard like a token based system could really offer a lot of yeah a lot of solutions that we've had of searching for in between this conversation today and obviously we do need to have those conversations right now not in five years time when the technology is further down the line and the design process has turned away so oh just quickly because I just feel that the way conversation goes we're thinking that's probably a question for you Martin with your technology rather than focusing on the robust and inclusive technology we're talking about backup for something that doesn't work we're not I'm thinking about it we're not talking about keeping the horses just in case better we're not going into the garage but that conversation sounds to me like that I would agree and I think you're exactly right you need to invest in petrol to fertilization to your in this new model because without it we won't get to proper broadband services out to the far-reaching we will always have that generic weakness you can't get petrol so you're going to rely on laws and we have got to address that and I don't think that's necessarily a banking infrastructure challenge that's almost 19 infrastructure for the nation broadband 4G plus 5G and everywhere and always long and until you've got that kind of reliability you have a problem that's what I'm saying should that energy go into that rather than looking for fixing I think there's room in our life to do things in parallel not serious I'm going to take some questions from my list Bob from London says it's about time we had a national flag of Britain for all public sector finance monopolies that works for us not the city council schools hospitals and public sector spend billions on bank charges since the financial crash of 2008 when the banks were bailed out we still own that west let's make it into the bank of Britain very light on perpetuation sorry but let me let's go with that one first because I think it's quite like he's the suggestion here is like the core positive money perspective right we want to have a national champion or some sort of governmental provider of these things I mean I guess we see the need like how we get to a money and banking system that serves an economy that is fairer more democratic and more sustainable isn't like a one policy that can do that there's a number of things and that's some of the things we've talked about today but I think you know I think it is critical that we that we kind of are honest around the current conversation from the this government is around kind of back to pre-2008 in terms of the competitive objective which I guess is what he's getting at like we've already bailed out the banks like we've already been happy with them so where how can we move things forward and I think there's kind of two main elements that we're interested in pushing very specifically and one is this digital cash infrastructure that can I think be quite transformative of the payment system for all the reasons we've had today and the second area is the fact that we need that diverse ecosystem of banks because the gentleman from earlier in terms of Germany does much better getting money into you know green technology weathering financial downturns UK is currently in recession we face quite a fragile place in terms of we are officially I think we are officially they banked even themselves with the command that last week and and so you know what can help us become less fragile less kind of see when it comes to financial instability is that diverse ecosystem of banks so that's not one fix but that's having a big infrastructure bank that's having community banks, mutuals potentially the post office having wider banking services than it does right now but you know as I think the comments we have all agree like this is often left out of the conversation when it comes to the future of finance for the UK and we just think of the city of London we just think of global competitiveness so we're not really thinking about the domestic economy and there's a real risk you know post Brexit ensuring a financial regulation obviously presents a big opportunity and the real risk from others is that we double down on that model which we would say hasn't worked for the majority of the parts of the UK hasn't worked for businesses hasn't worked for those citizens and you know it's really us with positive money with a lot of other organizations trying to raise that alarm and yes so I welcome Bob's question and I think that there is a widespread agreement and we don't want to go back to where we had 2008 but there's also a kind of a weak political world to take us forward in some of the aspects we've discussed today I mean David from a small business perspective obviously high fees not brilliant but there is a risk if we move to a bank of Britain model not necessarily saying that's what you're saying but if we did then there's a risk, I think this is well articulated by bankers generally that they will dissent to meet like a big national bank risks defunding and disintermediating and outcheating the commercial players so then instead of having a multitude of different price competitors you might end up with just the one state champion is that to what degree small businesses benefit in that environment because I know you're going to know where I'm heading here but competition is a good thing and if we only have one state player that crowds everybody out we end up in a kind of China model China has more competition than just one player No competition is a is a good thing and I think we need to be outcome focused so what are the outcomes that we want, we want anybody who's got a good idea or even a pretty good idea to start a new business to be able to get finance anybody running a business to be able to expand it through finance anybody who is accepting payment to be able to do so in what their customers are able to pay with and what to pay with that's the system that we need so I think we should be driven by that's where we want to get to and we're not there yet and then work backwards from that to what the system to get there looks like whether they'll be driven by that Alan from Malvern wants to know how is access to cash to be protected with the demise of the high street bank has been here not comfortable with online banking and the security of software and the internet so I mean we've covered a bit of this already but I think just going more on the security side of things because not just from a form perspective but from a you know a team meltdown like accidental all that sort of stuff which maybe the post office might have some excitement to I think we all ought to be aware of fraud and money laundering challenges so the question is absolutely right about access to cash where we're trying to take into account all the security issues I'd offer that there is massively a quantum timed different amounts of money being defrauded electronically from nation to nation there is cash on the high street however it is still a significant problem on the high street so trying to take the right steps to protect access to cash for those who need it and want it both to take it out, to put their bank account but also to then trade with small businesses and to have it easily paid back in again locally I think that cycle is where the post office plays mostly now we want to make sure that in that cash cycle it's all digital cash and that's really why we were sort of raising the challenge about sort of back to the limits if you like in the positive limits in trying to stop the fraud and increase the security and improve the problems where the cash has come from where it's going to we're sweeping up a lot of small businesses in that net and that's something that we do worry about because the security aspects money laundering are taking precedence over flexibility by which people who need and want to use cash can actually use it in the small business cycle How do small businesses feel about effectively the authorities outsourcing the policing of all this stuff to them to some degree especially on the limitations on cash like you know because really it's a police issue isn't it and it's like with COVID you know at the end of the day small businesses ended up policing the COVID restrictions not the police as much as is there an element of that here I mean I think to any extent small businesses are quite used to being asked to do things that are nothing to do with their core business and it's not just true on this it's true on a huge amount I think we have to be I think it is always tempting for government to ask businesses to do things that it doesn't have capacity to do and I think government needs to be realistic about what capacity the businesses themselves have to do it so I mean is it a burden for them to be responsible for that sort of you know cash management limitation and figuring out what is the banks or small businesses I don't think small businesses have been asked to be regulator if you like they are the factors well only the point at which cash is taken you've got someone who wants to buy something to cash that's what's going to happen the challenge I'm talking about is more about how somebody comes in with a large sum of cash which came into the bank account the banks of the regulator entities they're the ones that should be and are taking it very seriously say 50,000 pounds suddenly comes in they're accounting into an unknown account and instantly goes out again to 50 other accounts there should be a red line flashing somewhere I don't think that's a small business challenge small business owners take the cash for the services they provide I think that's yeah there's a slightly different point but I think it's still relevant in the sense that if you're a car dealer or whatever you are now responsible for doing KYC and AML on certain transactions over a certain level that is now yes you are I mean 100% I know that for a fact is it not the case if you're handling that small businesses handling large transactions in cash are responsible for doing KYC and AML on their accounts I think it might be your topic but I think it's part of the future of finance in the sense that these burdens are only in the world for business players especially in a mix where you get where you maintain cash and digital services I think yeah I just think what's important is that we're not we are ambitious in how easy we can make this thing there's a lot of good reasons for a lot of regulation the idea that it I think what I find quite frustrating is when it comes to question do you regulate or do you not rather than how well and how easy you can make things and how much you can make sure that it's in the capacity of whoever you're asking to comply and I think the problem is certainly you don't want pubs that take the payment in cash being asked to do lots of things that make clear that there's no clients for that cash that's just what pubs do so I just think it's about being actually quite thorough about when we do regulate how do we make sure that it's easy and that the verb is born on the people where that's appropriate and not born on people where it's the way that we go yeah maybe just building on that quickly but I mean something that us and others are colleagues at the finance innovation is the need for purpose of regulation we often have regulation as a kind of reaction to something that's not wrong or I think post-crash it's felt very much like risk management is the kind of framework of the finance regulators and what that means is is you kind of leave out the need as we've took up what kind of an ecosystem of banks in the UK or finance providers requires different kinds of regulators regulation than what we have which is designed really for the incumbents so I think actually part of this conversation in terms of the future of finance and all the kind of areas that we've covered today requires regulators to also be slightly more purpose driven than they are and slightly less just risk managers which I think inevitably means to things not really being done in the smartest way and also having unintended consequences quite often for small businesses and others so any more questions from the audience I think what you were saying was very interesting about what the post office is doing or hoping to do so in say a small town in say a thirst in North Yorkshire if they've closed all the banks is the post office hoping to have a sort of room or a counter where people can go to many different places a week to somebody representing Lloyd's Bank or Matt West or something like that and how's that going to work I mean that sounds interesting for people who are scared who don't have internet or have a phone call from somebody scaring them and what should actually go and see a real person that's exactly what it is it's a shared facility so in most cases it's going to be a third party site in other words it's going to have an empty costa or a retail somewhere in the high street the banks the post office is on the front and it's just a post office banking facility so it's not for parcels it's just a banking hub the banks themselves through link will assess the community to a point where all the banks have gone thirst there is now a dearth of cash there are no problems there we need to establish a bank post office will deploy one in that banking hub will be, as you said, a room whereby in a month it could be a Barclays rep, Tuesday Lloyd's Wednesday HSNC and so on and customers of those banks who have lost their face-to-face connection with the bank can now get back to what you might call relationship and high street banking they can come in and talk to somebody no, it's not it may not actually be a post office facility as you currently see it it might be a third party site there will be a post office in that town there always is if we can make them fit into post office that model, if we can't we will open a new location in which we will build a specific bank hub with that shared users thank you you're right and that will be open to lots of different bank representatives yes all the high street banks obviously you have different dominant banks in different areas Barclays is written on the south-east that's the historical centre Lloyd's is nationwide the S is quite clearly more so depending on the bias you might have a couple of days of one bank in one week if they're dominant in that area some banks may not have any customers of any real owners in that area at all but it's going to be a mix and match between and how does that who funds that? how is that cost effective for post office? the banks will be funding the utility facility that sits in there and all the transactions that go through the bank cash in and cash out is exactly the same thing as we do in any normal post office, so it's banking framework transaction it's basically a pooling of resources between the banks to service hard to reach areas to manage direct branches through their own branches so you might have seven banks represented where they've all closed their branches so seven branches squashing after one so it's kind of like an oligopolistic solution problem where they club together under the offices of a kind of government you'll have to spell that for me but I'm sure you won't no it's really interesting who owns the post office now? yes we all own it's not the Dutch post office it's all the UK post office it's our own treasure our own jewel I think that we're at 20 past I think we can finish it early maybe people who are here in person can then talk to the panellists directly over some copies which are available outside as well for free, funded by unknown sources probably very nice so I urge you all to go and do that so thank you very much and thank you for joining me I'm going to be proud of having me