Fintech will change the nature of money says Bank of England Governor
The Bank of England plans to encourage innovation in financial technology by collaborating with companies which are designing innovative payment systems and cybersecurity, to further build on Bitcoin’s blockchain concept.
Mark Carney, the governor of the Bank of England, had intended to announce the so-called Fintech accelerator in his annual Mansion House speech on Thursday. However, he did not deliver the scheduled speech and instead paid tribute to the late MP Jo Cox as a “remarkable person” who “dedicated her life to helping others”.
Threadneedle Street issued his remarks on Friday, in which he set out the importance of Fintech and the implications that innovation in finance could have on managing the economy and financial stability.
Carney said: “Fintech should neither be the wild west nor strangled at birth. The Bank is devoting considerable resources to ensure whatever develops is sustainable, not ephemeral.”
He said it would “change the nature of money, shake the foundations of central banking and deliver nothing less than a democratic revolution for all who use financial services”.
“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, together with the valuable ‘first client’ reference that comes with it,” said Carney.
He said that the behind-the-scenes payment system – known as real-time gross settlement (RTGS) – would be opened up beyond the 48 major institutions that currently use it to so-called payments service providers, which deal with retailers. In this way the service providers will not have to rely on the banks with which they are competing to gain access to the payments network.
“It should also enable more efficient, effective and inclusive payments, including in ways that we cannot fully anticipate,” Carney said. Firms that sign up to use RTGS will also be subjected to regulation, he added.
A blockchain is the technology that guarantees the authenticity of an online currency by creating publicly available “ledgers” of transactions in blocks of data. Carney said: “The great promise of distributed ledgers for central banks is their potential to enhance resilience.”