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The Bank of England (BoE) opening up its balance sheet to payment companies and tech firms such as Facebook would bolster Britain’s 7 billion pound ($9 billion) fintech sector just as it faces tougher competition from Europe after Brexit.
BoE Governor Mark Carney has said the Bank will consult next year on providing an “appropriate” level of access to its 500 billion pound balance sheet to new payment providers, putting them more on a par with the big banks that dominate payments.
If the BoE approves the move, it would be the first major central bank anywhere in the world to let non-banks have direct access to its coffers, making it potentially attractive to large technology companies expanding into payments such as Amazon and Apple.
“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, partner and head of financial services insights at Deloitte.
Banking analyst John Cronin said the Bank could also be taking out insurance if the rapid advances of technology at payment companies dent the ability of commercial banks to make enough money as payment companies.
“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.”
Source: Reuters
