Bank of England Official Stresses Importance of Operational Resilience for Financial Market Infrastructures

In a speech delivered to the London Institute of Banking & Finance, Sasha Mills, an official from the Bank of England, emphasized the critical role of operational resilience for financial market infrastructures (FMIs) in maintaining stability and confidence in the UK's financial system.

Mills outlined the Bank of England's Operational Resilience Policy, which aims to ensure that crucial FMIs, such as payment systems, clearing houses, and securities depositories, can respond to and recover from extreme but plausible disruption scenarios before the broader financial system is destabilized.

"Confidence in FMI services is critical to having a vibrant and prosperous economy," Mills stated. "Households and businesses want to be confident that payments are going through, transactions are being settled, and post-trade activities are completed."

The policy requires FMIs to identify their most important business services and set "impact tolerances" – the level of disruption those services can withstand before risking financial stability. FMIs must then demonstrate their ability to meet those tolerances under various extreme scenarios, such as cyber attacks, natural disasters, or operational errors.

With the March 2025 deadline for compliance approaching, Mills urged FMIs to accelerate their efforts in calibrating impact tolerances, mapping key dependencies, and rigorously testing their response and recovery capabilities through sophisticated scenario planning and testing.

"FMIs need to make sure that they are both addressing known vulnerabilities and taking into account changing or increasing risks, for example from increasing digitalization and the emergence of new technologies," Mills cautioned.

The speech also highlighted the Bank's broader efforts to promote system-wide operational resilience, including the Financial Policy Committee's macroprudential approach, direct oversight of critical third-party service providers, and international collaboration to develop common standards and best practices.

Mills emphasized that while regulatory initiatives aim to bolster resilience, the ultimate responsibility lies with FMIs themselves. "Operational resilience starts and ends with systemically important actors in the financial system understanding their responsibilities and ensuring they are prepared for the worst," she concluded.

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