Sunday, July 7, 2019

Fintechs and Central Bank Deposit Accounts

In reading Izabella Kaminska’s Why dealing with fintechs is a bit like dealing with pirates [FT Alphaville is free, but registration is required], I thought of two points from past blogs.  First, the critical, controversial issue of who should have access to an account at a central bank.  The article notes China’s decision to require “domestic fintechs like Alipay and WeChat…[to] hold their customer deposits on a full reserve basis at the central bank directly,” and also points to Governor Mark Carney’s recent discussion of permitting fintech companies to deposit funds at the Bank of England.  Second, the strategic point of recognizing when change is inevitable, and proactively helping to shape it.  Kaminska seems to suggest that a potential reason for this expansion in central bank account access is recent power shifts in the area, and central bankers’ desire to proactively shape the inevitable changes on the horizon in financial markets.  As is generally the case, Kaminska's piece is a worthwhile read.

Colleen Baker | Permalink


Interesting that fintechs are interacting with central banks. In the US, the OCC's nascent fintech charter expressly anticipates that chartered fintech lenders will NOT take deposits at all. But, if I recall correctly, it remains an open question whether they will have access to the Fed window.

Posted by: Matthew Bruckner | Jul 18, 2019 8:13:28 PM

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