admin Opening up the Bank of England’s balance sheet to payment companies and tech firms like Facebook would strengthen Britain’s £7 billion ($9 billion) fintech sector, especially as it encounters stiffer competition from Europe post-Brexit.
Mark Carney, who is the BoE Governor has announced that the Bank will consult next year on offering an “appropriate” level of access to its £500 billion balance sheet for new payment providers, aiming to level the playing field with the big banks that currently dominate the payments landscape.
If the BoE approves this move, it would become the first major central bank globally to grant non-banks direct access to its funds, potentially drawing interest from large technology companies like Amazon and Apple that are expanding into payments.
“The Governor’s promise to go further by opening (the BoE)balance sheet and access to the payments system could further cement London’s role as a key international fintech hub,” said Margaret Doyle, who is the partner and head of financial services insights at Deloitte.
Banking analyst John Cronin said that the Bank might also be hedging its bets in case the rapid technological advancements in payment companies undermine the profitability of commercial banks.
“Arguably over the much longer term it could be seen as a defensive move if banks’ business models were to come under threat from Facebook’s Libra and others,” Goodbody analyst Cronin said.
“You can see how winners and losers emerge.”
At the start of this week, even Facebook announced that they plan to introduce Libra, which is a cryptocurrency which is an initiative to explore into digital payments.
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