On 15 December 2022, the Bank of England (BoE) published a Consultation Paper on the supervisory approach to wholesale cash distribution.
The Consultation Paper sets out proposals for how the BoE proposes to implement its new powers in respect of the wholesale cash distribution (WCD) infrastructure in the UK, also known as the wholesale cash supply chain. These powers are part of the amendments to the Banking Act 2009 made by clause 52 and schedule 9 to the Financial Services and Markets Bill.
The statutory WCD regime will have two core parts: market oversight and prudential supervision. The main objective of the market oversight regime is to manage risks to the effectiveness, resilience and sustainability of WCD in the UK. The main objective of the prudential supervision regime is to manage risks that a) threaten the stability of, or confidence in, the UK financial system, or b) have serious consequences for business or other interests throughout the UK, or any part of the UK.
HM Treasury will bring firms within scope of the statutory WCD regime by recognition orders. For market oversight, this will capture firms that play a significant role in the WCD market. This includes firms who provide a critical service to these markets, if deemed appropriate and necessary to manage risks to the system. For prudential supervision, it will, for example, be firms that could pose a systemic risk to wider financial stability.
The BoE invites interested parties to respond to the following questions:
- Do you agree with the proposed approach to the Bank’s oversight of the WCD market?
- Do you agree with the proposed principles for the WCD market oversight regime?
- Do you have any initial comments on the early high-level proposals for CoPs for recognised WCD market firms?
- Do you agree with the proposed approach to the allocation of supervisory fees for the WCD market oversight regime?
- Do you agree with the proposal for prudential supervision of any systemic entity that may form in the future?
The deadline to respond to the Consultation Paper is 10 February 2023.