“Fintech has the potential to deliver more resilient financial infrastructure, more effective trade and settlement, and new ways to encode, share and analyse data,” the bank’s governor, Mark Carney, said.
“For everyone, fintech may deliver a more inclusive financial system, domestically and globally, with people better connected, more informed and increasingly empowered.”
Fintech Accelerator
The initiative will see the BoE work in partnership with fintech firms on the unique challenges facing central banks.
“The Accelerator will work with new technology firms to help us harness fintech innovations for central banking. In return, it will offer firms the chance to demonstrate their solutions for real issues facing us as policymakers,” Carney said.
“Fintech should neither be the Wild West nor strangled at birth.”
“With time, the Accelerator will build a network of firms working in this space for the benefit of us and them alike.”
Regulatory recalibration
The rise of fintech poses a host of challenges for regulators, with the BoE devoting considerable resources to ensure that whatever develops is sustainable, not ephemeral, Carney explained.
“Fintech should neither be the Wild West nor strangled at birth,” he said.
“Our interest is ensuring the safety and soundness of banks, the protection of insurance policy holders and the resilience of [the] financial ecosystem as a whole to these changing risks. That is why the bank has been engaging with fintech firms to understand better the financial stability risks that could emerge as banking is reshaped.
“Where firms or activities become systemic and risks to the real economy grow, they will come within the purview of the bank’s responsibilities for the stability of the system as a whole. The financial policy committee will continue to monitor the scope of the regulatory perimeter. Adjustments will follow if necessary.
“When fintech companies fall within our remits, we will monitor them in the same proportionate way that we approach other firms – backed by analytics and judgement, taking action where appropriate.
“We are building a system that allows for orderly failures. Not just to end the blatant unfairness of ‘too big to fail’, but also to foster industry dynamism and better outcomes for consumers. After all, ease of exit promotes ease of entry. We won’t discourage avatars by preserving dinosaurs,” Carney said.
Cancelled speech
The governor had been scheduled to make the announcement during a speech on Thursday; but following the murder of Labour MP Jo Cox, he chose instead to use the opportunity to pay tribute to her.
The full transcript of Mark Carney’s speech can be found here.
