Bank of England: considers the three ‘cross-cutting’ technologies as having ‘the most potential for transformative outcomes’ | Credit: Ian Hall

The Bank of England (BoE) has published a report setting out its strategy across artificial intelligence (AI), distributed-ledger technology (DLT) and quantum computing.

The three areas are described by the UK central bank as the ‘cross-cutting technologies that we are prioritising for further action, consistent with our focus on disruptive technologies with the most potential for transformative outcomes.’

The executive summary of the 36-page publication – ‘The Bank of England’s approach to innovation in artificial intelligence, distributed ledger technology, and quantum computing’ (15 October) – describes the fields as having the potential to be ‘the most transformative technologies of our time, with the potential to reshape the UK economy and boost productivity.’

The BoE uses the document to outline its approach to ‘delivering the environment necessary to ensure that responsible innovation flourishes, setting out the work we have done and will do.’ It focuses on three ‘levers’ that it can use: its ‘hard’ (physical or tangible) infrastructure; its ‘soft’ infrastructure (rules, regulations and standards); and its ‘convening and co-ordinating’ role.

‘While we have focused on these as the three technologies with the greatest potential today to shape our economy and financial services, we recognise that technological trends are difficult to forecast,’ BoE deputy governor (financial stability) Sarah Breeden writes in the foreword. ‘Currently expected benefits may not materialise, and new technologies impacting our work will emerge in future. Our approach is flexible to that.’

AI use ‘increasing rapidly’

The AI section notes that deployment of the hot-topic technology is ‘increasing rapidly’ across the UK’s financial services sector. According to a survey on AI use by the BoE and the Financial Conduct Authority (FCA) last year (2024), 75 per cent of respondent firms are already using AI, with a further 10 per cent planning to use AI over the next three years.

In May, following an ‘AI Public-Private Forum (AIPPF)’ that ran from 2020 to 2022, the BoE launched an ‘AI Consortium’. Co-chaired with the FCA, this is a ‘group of AI experts, providing a platform for public-private engagement to gather input from stakeholders on the capabilities, development, deployment and use of AI.’

The strategy document explains that AI Consortium members will ‘explore specific challenges and risks such as the growing reliance on third-party providers, increased use of similar AI models that could amplify systemic vulnerabilities, and the explainability and transparency of AI models.’

The document states that the BoE plans to ‘engage with regulated firms further to understand how we can support adoption’ and ‘will explore future opportunities to supplement our engagement with insights from AI experimentation.’

Also mentioned is the Cross Market Operational Resilience Group (CMORG) – a public-private initiative co-chaired by the BoE’s executive director for supervisory risk and chief executive of lobby group UK Finance – which has an ‘AI Taskforce’ to ‘support the financial sector’s ability to identify and respond to emerging risks posed by widespread adoption of AI technologies.’

BoE’s own use of AI

The BoE published its internal AI strategy (‘The Bank’s artificial intelligence (AI) strategy’) in August and summarises this in the new document.

The August document explained that AI is an umbrella term encompassing sub-disciplines such as machine learning (ML), deep learning (DL) and generative AI (GenAI).

The internal AI strategy, described by the BoE as a ‘cornerstone’ of its broader ‘data and analytics’ strategy, has five goals: to use AI to increase productivity; promote and encourage experimentation; use AI effectively and responsibly; collaborate, learn from others and stay informed; and ‘ensure AI works for our staff.’

Examples of current AI uses include predictive analytics, study of ‘non-linear interactions between variables’ and analysis of ‘larger and richer data sets, which can potentially help forecast GDP growth and bank distress, for example.’

The BoE states that it has ‘rolled out off-the-shelf AI assistants across the Bank, delivering productivity gains in a range of tasks including summarisation, note-taking and code generation’; and adds that it is building bespoke AI solutions, for example, the Prudential Regulation Authority (PRA) – which is part of the BoE – is ‘exploring the use of LLMs [large-language models] to enhance supervisory tools, supporting tasks such as data extraction and natural language querying.’

DLT on the rise

In the DLT section, the BoE gives examples of its involvement in Bank for International Settlement (BIS) Innovation Hub initiatives such as ‘Project Meridian’ and ‘Project Agorá’.

It also highlights that it is currently running a ‘DLT Innovation Challenge’ alongside the BIS Innovation  London centre (which the BoE itself hosts). This programme engages with the private sector to better understand the implications of incorporating DLT into wholesale central bank settlement.

The strategy then sets out how the BoE is ‘adapting the execution of [its] core functions’ to ensure that central bank money can interact with technologies such as DLT. As an example, it references that, since introducing an omnibus account policy in 2021, the BoE became the first central bank to have onboarded a private DLT-based payment system – Fnality in 2023. (An omnibus account at the BoE is a central bank money account for regulated payment system operators to hold a pool of their participants’ funds).

The BoE’s renewed real-time gross settlement (RTGS) service (‘RT2’) went live six months ago (April 2025). ‘As part of the future roadmap for RT2, the Bank is working closely with industry to design and introduce a synchronised settlement interface that will allow RTGS to interoperate with other external ledgers, including those based on DLT,’ the new strategy document notes.

‘These platforms could include overseas RTGS systems and other asset ledgers such as land registries, to support more integrated financial transactions,’ it continues, adding that the BoE plans to launch a ‘synchronisation lab’ in 2026 ‘to enable potential synchronisation operators to test real-world use cases with our planned functionality.’

‘We are also planning a series of further experiments in wholesale settlement, exploring whether platforms based on DLT or other emerging technologies could offer capabilities beyond RTGS synchronisation to support the development of next-generation innovative use cases,’ it adds.

Quantum capabilities ‘in early stages’

Quantum computing ‘in the not-too-distant future… could solve computational problems at scale that are beyond the capabilities of the best computers today,’ the strategy’s foreword summarises.

‘There is considerable uncertainty around how quickly quantum computing will materialise,’ the quantum-specific section notes. ‘Quantum computing capabilities are still in the early stages of development, particularly in comparison to AI and DLT.’

Nonetheless, the BoE states that it has engaged with firms ‘through CMORG and the FCA to understand firms’ quantum readiness, which has helped us begin to map the practical implications of quantum technologies across the financial services sector’. The BoE has also ‘begun to build relationships with the quantum technology ecosystem, other peers and regulators, and academics working in this nascent field.’

The BoE has ‘developed risk scenarios for post-quantum threats, including encrypted data harvesting and quantum-enhanced trading, and we are piloting a supervisory briefing on quantum risks.’

The authority will ‘continue to build our understanding of the potential opportunities and risks posed by quantum computing for the financial sector, its implications for our objectives, our regulatory framework, and our supervisory priorities, similar to the work we have undertaken on AI’; ‘will continue to build capabilities within the PRA to enable effective engagement with firms and the sector on a post-quantum future’; and ‘will encourage upskilling within the financial system to raise awareness of the potential risks posed by quantum computing.’

The BoE adds that it co-chairs the G7 Cyber Expert Group (CEG) with the US Department of the Treasury, focusing on co-ordinating cybersecurity and strategy across the G7, with recent work including last month (September)’s publication of a three-page ‘G7 Cyber Expert Group Statement on Planning for the Opportunities and Risks of Quantum Computing’; and will ‘continue to work closely with domestic authorities and international peers’, including the National Cyber Security Centre, National Quantum Computing Centre, G7, Organisation for Economic Co-operation and Development (OECD) and Switzerland-headquartered BIS.