Watch­dog in wait­ing game over fin­tech

Yorkshire Post - Business - - MARKETS REPORT -

REG­U­LA­TORS TRY­ING to po­lice in­no­va­tions in fi­nan­cial tech­nol­ogy are wait­ing to see whether start- ups de­velop open sys­tems or ones that al­low only lim­ited ac­cess for users, a Bank of Eng­land con­fer­ence heard.

Reg­u­la­tors are look­ing into new rules for so- called fin­tech, which in­cludes peer- to- peer lend­ing, and the use of blockchain or the dis­trib­uted ledger tech­nol­ogy un­der­pin­ning the bit­coin vir­tual cur­rency.

The sec­tor is still tiny but reg­u­la­tors worry it could grow quickly and pose risks to the fi­nan­cial sys­tem.

“We need to un­der­stand what the model is,” Bank of Eng­land Chief Cashier, Vic­to­ria Cle­land said.

The BoE is try­ing to “join the dots” be­tween the po­ten­tial ben­e­fits and risks from dig­i­tal cur­ren­cies, blockchain and other in­no­va­tions, she said. “With all th­ese things go­ing on, we need to be ready to re­spond to what would regulation mean.”

Banks are ex­am­in­ing blockchain uses to avoid be­ing caught out like the taxi sec­tor has been by on­line cab finder Uber or hoteliers by on­line ac­com­mo­da­tion com­pany Airbnb, the con­fer­ence heard.

But there is fierce de­bate over what sort of busi­ness model is best, and whether it should be an open sys­tem that can be ac­cessed by the gen­eral pub­lic via the in­ter­net.

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