Chancellor of the exchequer Rishi Sunak announced today the launch of new fintech taskforce to “coordinate exploratory work on a potential central bank digital currency,” led by the UK Treasury and Bank of England.
Responding to Sunak's announcement, the Bank of England has set up a dedicated CBDC unit overseen by deputy governor Jon Cunliffe, to explore the creation of a digital pound, and set up two stakeholder forums on CBDC engagement and technology.
Speaking at Innovate Finance Global Summit, Sunak also highlights that the Bank of England has published a new account policy, allowing new and innovative financial market infrastructure propositions. Under the new model, an operator of a payment system can hold funds in the omnibus account to fund their participants’ balances with central bank money.
Fnality, the private-sector stablecoin initiative supported by 15 major banks, has already announced its intention to apply for an omnibus account.
John Whelan, MD - digital investment bank & innovation, at Fnality stakeholder Banco Santander, says: "It is exciting to see this development from the Bank of England supporting the opportunity to use tokenised cash assets on next generation payment systems, enabling on-chain wholesale exchange of value."
Alongside this, the chancellor promises a new financial market infrastructure sandbox for firms “innovating with new technologies like distributed ledger technologies.
The UK Government also intend on consulting this summer on reforms to capital markets, such as removing double volume cap and share trading obligation, which will ensure that the UK “continues to have the highest possible regulatory standards, whilst improving our competitiveness, supporting economic growth, and making sure the rulebook is fair and proportionate.”
Further, Sunak also reveals that the UK Treasury will be setting out a detailed response to the Kalifa Review in a written statement to Parliament “shortly" as well as publishing plans on taking on the recommendations in Lord Hill listings review. On the Kalifa Review, the chancellor highlights three steps that are to be taken: fintech visa reformation and support for skilled employees, the FCA’s commitment to a fintech scalebox and a new Centre for Finance, Innovation and Technology.
“First, I can confirm that we're already reforming the visa system to help firms like yours, complement your domestic recruitment efforts with the best and most promising tech talent from around the world.
“Second, if we want to support fintech businesses to scale up, we need to make sure that regulatory toolkit is there. So, we're pleased to announce today that the Financial Conduct Authority has decided to take forward the idea of a regulatory scalebox, a package of measures to help fintech firms to grow.
“And I can commit today that will work with the fintech community to realise the idea of a new industry led Centre for Finance, Innovation and Technology to utilise and enhance fintech expertise across the United Kingdom's nations and regions.”
At this event part of UK Fintech Week, Sunak's vision to enhance the UK’s competitive advantage in fintech, from regulatory reforms to help firms grow to a new taskforce to lead the UK’s work on a central bank digital currency, is evident.
"Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre," Sunak outlines.