The Bank of England (BoE) has published a speech given by its Governor, Mark Carney, entitled Enabling the FinTech transformation: Revolution, Restoration, or Reformation?

In his speech Mr Carney mentions that FinTech has the potential to affect monetary policy transmission, the safety and soundness of the firms its supervises, the resilience of the financial system and the nature of shocks that it might face. It could also have profound implications for the BoE’s secondary objective to facilitate effective competition between the firms it regulates. However, Mr Carney’s own forecast is that FinTech’s consequences for the BoE’s objectives  will not become fully apparent for some time as many of the technologies are untested beyond proofs of concepts and that the bar for displacing incumbent technologies is very high.

However, the BoE is actively exploring how new financial technologies could support its policy objectives. There are five ways the BoE is enabling the FinTech transformation:

  • widening access to central bank money to non-bank payments service providers;
  • being open to providing access to central bank money for new forms of wholesale securities settlement;
  • exploring the use of distributed ledger technology in its core activities, including the operation of real-time gross settlement;
  • partnering with FinTech companies on projects of direct relevance to the BoE’s mission; and
  • calibrating its regulatory approach to FinTech developments.

Separately the BoE has announced the launch of a FinTech Accelerator. This project will involve new technology firms helping the BoE to harness FinTech innovations for central banking. The FinTech Accelerator has already carried out initial work in the areas of data anonymisation, cyber security and distributed ledger technology. Other areas of potential future interest for the project include:

  • finding new ways to structure and analyse large datasets;
  • machine learning, particularly in relation to anomaly detection and pattern recognition; and
  • protection of the BoE’s sensitive data.

View Enabling the FinTech transformation: Revolution, Restoration, or Reformation? 16 June 2016