At this year’s Fintech Week, Chancellor of the Exchequer, Rishi Sunak, announced a plan to ensure the lead of the UK in digitalising finance. His proposal covers the support of growing fintech businesses and hubs throughout the UK, the overall expansion of digital finance, as well as regulatory support and reforms and the composition of a new taskforce for conducting work on a central bank digital currency.
The Chancellor lays out that the UK government’s vision is for a transparent, green and technologically advanced financial services sector and that even though the UK is already at the forefront of innovation it needs to push further. He also states that steps include to boost growing fintech companies, and improve financial markets as well as extend the boundaries of digital finance in general – all to establish the UK’s position as the global financial centre.
Support for FinTech Innovation
For the point of scaling up fintech businesses, the Financial Conduct Authority (FCA) will set up a ‘scale box’, consisting of measures to strengthen its regulatory sandbox – which allows start-ups to try out new concepts. Furthermore, a second phase of the Digital Sandbox will be launched for firms to research concepts and come up with ideas for tackling challenges regarding sustainability and climate change.
Another step included in this fintech plan is the creation of an industry-led Centre for Finance, Innovation and Technology (CFIT), working with regional and national fintech hubs to pinpoint challenges within the sector and make improvements.
Extending Digital Finance
To ensure the UK will remain at the forefront of financial services digitalisation, Sunak announced a taskforce that will combine HM Treasury and the Bank of England. The taskforce is predominantly supposed to explore ways of setting up a UK central digital currency (CBDC). Additionally, two forums will be launched to engage tech experts as well as key stakeholders through the process of establishing the CBDC.
For the support of innovation within the private sector, the Chancellor announced that firms will have access to a new sandbox, inspired by the FCA’s sandbox and through collaboration of the FCA, HM Treasury and the Bank of England.
Reforms and Capital Markets Rules
By making use of the Listing Review, the Chancellor sets out to further augment the way innovative businesses can receive financial help and raise money in the UK. In addition to this, the government will seek advice on a possible rebuilt to its prospectus regime, due to overseeing information businesses ought to publish once raising financial resources. This is to make sure these rules would not become onerous, while still providing investors and stakeholders with the necessary information.
It will further look into how to optimise a way for businesses to efficiently provide financial information that is most relevant to respective investors, especially being advantageous to high-growth potential tech and life science companies and stakeholders. The regulation of legal issues will be overlooked as well, with a particular focus on the role of technology.