The Bank of England is setting up its own FinTech hub to explore ways emerging technology such as digital currencies can be used to benefit the UK’s economy.

Speaking at HM Treasury’s International Fintech Conference yesterday, the deputy governor for markets and banking Dave Ramsden said the hub will be a central point of contact for the FinTech sector to engage with the BoE, and will play an active role in the new regulatory taskforce.

At the same conference, chancellor of the exchequer Philip Hammond announced the government’s FinTech sector strategy, which included the cryptoassets task force, next steps in ‘robo-regulation’ and a UK-Australia ‘FinTech bridge’ to help firms expand internationally.

Ramsden said FinTech growth could help Britain tackle weak productivity growth and assist the BoE in improving its internal infrastructure. “As a member of the Monetary Policy Committee, I need to be open minded about the way FinTech could impact the economy of the UK,” he said.

“The defining trend of the last 10 years has been the weakness of productivity. Given the size of the financial sector in the UK, I can see FinTech driving competition and a pick-up in productivity in the medium term.”

The BoE’s governor Mark Carney had previously stated that crypto-assets themselves may have limited utility, as they are too volatile to be a store of value, with high transaction costs and slow settlement times. However, “we also recognise the opportunities in the technologies that underpin crypto-assets,” he added.

The BoE’s Financial Policy Committee recently discussed the current risks posed by crypto-assets and judged that they do not pose a material risk to UK financial stability.

“Balancing the resilience, performance and privacy features of distributed ledger technology is not an easy problem to solve – and many developments are currently focusing on performance and privacy, at the potential cost of resilience,” stated Ramsden. “But the distributed ledger and cryptographic technologies used by crypto-assets have the future potential to deliver benefits both to the financial system and to the economy it serves, including increasing efficiency and resilience and contributing to a more distributed and diverse payments system.”

He continued that the BoE is doing a proof-of-concept test with a small cohort of firms to consider how its renewed service could interface with innovative settlement systems, such as those built on distributed ledger technology.

Mr Ramsden also noted that the BoE is continuing to investigate ways in which FinTech could help to improve regulation, initiating work to understand how machine readable technology could be applied to the next iteration of the Prudential Regulation Authority’s rulebook. “We are also investigating if machine learning could be deployed to support judgement based supervision, via its application to both structured and unstructured data,” he added.

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