A senior central bank official has stated that the priority of the Bank of England is to create a regulatory approach to Fintech as it understands its impact, according to Reuters.
Victoria Cleland, the BoE’s Chief Cashier, explained that the risks and advantages of digital currencies and blockchain were being assessed.
This announcement by the BoE comes when policymakers in Britain want to know if London will remain the global centre for Fintech or if companies will move to other European countries instead.
Cleland said that the BoE was working with firms in the Fintech sector to determine where the boundaries will be.
Speaking at a peer-to-peer lending conference, she drew parallels toward fintech as a global industry which would require careful regulation. She stated:
It’s very difficult to decide how to regulate something you don’t quite know what it is.
Bank of England Aims to Boost Fintech
In June, the BoE announced its plans to explore new Fintech by working closely with companies to improve its cyber security and payment systems.
Through its Fintech Accelerator program, the BoE has received applications from firms which will aid the bank to harness Fintech innovations.
Mark Carney, the governor of the Bank of England said at the time that the adoption of Fintech could enhance financial market participation, which in turn could strengthen monetary policy.
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.
Creating Its Own Digital Currency
In a bid to stay ahead of competition the BoE was examining a digital currency in its attempts to maintain its modernization this year, according to an earlier CCN report.
Last month, CCN reported that University College of London researchers had developed the RSCoin at the central bank’s suggestion.
The BoE seem to understand the benefits of digital currency and have recognized that these types of transactions can be executed better compared to traditional currency transactions.
Not only that, but by being one of the few banks to create their own digital currency the BoE are taking measures to improve their operating services compared to those that are simply relying on blockchain technology.
Bitcoin Won’t Replace Fiat Currencies
Of course, despite all this, the BoE’s deputy governor for monetary policy, Ben Broadbent has said that the issuance of digital currencies will put bank’s at risk and that digital currencies like bitcoin won’t replace the U.S. dollar or the British pound anytime soon.
Yet, while this may be the case, the fact that the BoE are embracing Fintech and looking at technologies such as bitcoin and blockchain it can only be a step in the right direction for the central bank.
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