Oral Answers to Questions

Debate between Andrew Griffith and Alun Cairns

Tuesday 20th June 2023 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

Clear policy direction and a strong regulatory framework have led to the UK being the world’s leading centre in financial technology. Does my hon. Friend agree that the crypto industry offers the same opportunity for the UK to exploit?

[Andrew Griffith]

My right hon. Friend is absolutely right. I was pleased to join him in a Westminster Hall debate about the regulation of the cryptoassets sector. I commend the work done in this House by the crypto and digital assets all-party parliamentary group. He might join me in welcoming the decision by Andreessen Horowitz, one of the world’s largest technology companies, to locate its only international office outside of San Francisco here in the UK and to run its 2024 cryptoassets school here.

Cryptocurrency Regulation

Debate between Andrew Griffith and Alun Cairns

Tuesday 13th June 2023 Westminster Hall

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure for me to serve under your chairmanship, Mrs Harris; congratulations on your first time chairing our proceedings in Westminster Hall. I congratulate the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) on once again securing a debate in Parliament on crypto regulation. It is particularly apposite to do so during London Tech Week. I would also like to extend a welcome to Minister Bornyakov and his team, who are watching this debate from the Public Gallery.

I know that the hon. Member for East Kilbride, Strathaven and Lesmahagow shares with me and this Government a desire for the UK to be a leader in this space; that is our vision. I thank her and the crypto and digital assets all-party parliamentary group, which she chairs, for its excellent recent report, which is timely and adds to the growing canon of work. It is a good read, and I commend it to all parliamentarians and policymakers. One of the valuable functions that that group performs is to raise the level of understanding of this exciting but sometimes challenging new domain.

Let me be clear. The Government’s goal is simple: it is for the UK to be an open, well-regulated and technologically advanced society. The extraordinary technology under- pinning distributed ledger technology, or DLT, could have profound and positive impacts across multiple sectors in the UK, including more efficient trading, cheaper payments across borders, more choice for consumers and, as the hon. Member for East Kilbride, Strathaven and Lesmahagow said, the benefit for financial inclusion. Beyond that, it is part of the wider Web3 decentralised movement that is leading to a radical rethink about what the future of the internet might look like and who—which sort of organisations—determines that. McKinsey research suggests that this could be

“a paradigm shift in the business model…by making disintermediation a core element”,

while a research analytics firm estimates that the global market size of Web3 could reach $81.5 billion by 2030.

[Alun Cairns]

I congratulate my hon. Friend the Minister on pressing ahead with the digital pound that is under consideration in order to ensure that the UK is at the forefront of digital currencies. But is he confident that all the regulators—within the Bank of England for the digital pound, but also the Financial Conduct Authority and others—have the capacity and expertise necessary to deliver the vision that the all-party group and the Government are seeking to set out? Does he agree that it is worrying that many crypto companies find it challenging to open bank accounts simply to conduct their business?

[Andrew Griffith]

I pay tribute to my right hon. Friend for the points that he made about how important it is that we lean into this space. He used the excellent and apposite example of fintech—a flourishing industry, for which the UK is genuinely one of the leading centres in the world. I share his concern about the availability of bank accounts. As he understands—I am sure he would not wish it otherwise—that is a commercial decision for organisations, but to the extent that the regulatory framework, or indeed the regulatory culture, is a contributing factor, Parliament will bring cryptocurrency into the regulated domain and decide that it is a lawful activity that could reap many benefits for the United Kingdom. It would, of course, be a concern if those who take part in this lawful and well-regulated activity were unable to procure bank accounts, so I can undertake to keep a close eye on that. I do not plan to make an immediate intervention, but he and other colleagues have raised the issue, as has the APPG. I will undertake to keep a close eye on it, and I am open to hearing examples of where people cannot open bank accounts.

The hon. Member for Strangford (Jim Shannon) has left the room, but I can give him the assurances he seeks. As a proud Unionist, it is a delight to have such a diverse set of representatives from across all parts of the Union. It is wonderful to have contributions from all parts of the Union today, but financial services is a reserved matter, and the Treasury and Parliament will bring forward the right regulations. The regulators have hitherto been clear about some of the risks in this domain, and we seek to strike the appropriate balance between not regulating and introducing appropriate regulations while recognising the potential consumer harms and making sure that we have effective, clear, proportionate and timely regulation. Those seem to be entirely desirable attributes.

Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) Order 2023

Debate between Andrew Griffith and Alun Cairns

Monday 27th March 2023 General Committees

[The Economic Secretary to the Treasury (Andrew Griffith)]

I beg to move,

That the Committee has considered the Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) Order 2023 (S.I. 2023, No. 319).

It is a pleasure to serve with you in the Chair, Mr Hollobone.

As right hon. and hon. Members will be aware, Silicon Valley Bank UK Ltd was sold on Monday 13 March to HSBC. Customers of SVB UK are now able to access their deposits and banking services as normal. The transaction was facilitated by the Bank of England, in consultation with the Treasury, using powers granted to it by Parliament through the Banking Act 2009. In doing so, we limited risk to our tech and life sciences sector and safeguarded some of the UK’s most promising companies, protecting customers, financial stability and the taxpayer. The solution was a win for taxpayers, customers and the banking system.

SVB UK has become a subsidiary of HSBC’s ringfenced bank. Ringfencing requires banking groups that hold over £25 billion of retail deposits to separate their retail banking from their investment banking activities. The regime provides for a four-year transition period for an entity acquired as part of the resolution process before it becomes subject to ringfencing requirements. As a result of that existing legislation, SVB UK is not currently subject to ringfencing requirements. However, HSBC UK, the parent company of SVB UK, remains subject to the ringfencing regime.

To facilitate the transaction, we laid in both Houses of Parliament on Monday 13 March a statutory instrument, using powers under the Banking Act 2009, to broaden an existing exemption in ringfencing legislation with regard to HSBC’s purchase of SVB UK. The exemption allows HSBC’s ringfenced bank to provide below market rate intra-group funding to SVB UK. That was crucial for the success of HSBC’s takeover of SVB UK, because it ensured that HSBC was able to provide the necessary funds to its newly acquired subsidiary.

HSBC has since stated publicly that it has provided approximately £2 billion of liquidity to SVB UK—money that it required to continue to meet the needs of its customers, and which this instrument facilitated. The Bank of England and the Prudential Regulation Authority are fully supportive of this modification to the ringfencing regime as a necessary step to facilitate the sale.

In view of the urgency, and given that this statutory instrument was crucial in enabling the sale, the Treasury determined that it was necessary to lay the instrument using the made affirmative procedure, under its powers in the Banking Act 2009. Parliament provided the Treasury with those powers for exactly such situations, recognising that exceptional circumstances can arise when the Government must take emergency action in the interests of financial stability, depositors and taxpayers.

The statutory instrument also makes a number of modifications to the Financial Services and Markets Act 2000 in relation to the rule-making powers of the PRA and the Financial Conduct Authority. Specifically, the rule-making powers are modified to ensure that regulators can exercise them effectively when they relate to the Bank of England’s transfer of SVB UK to HSBC, and the write-down of SVB’s UK shareholders and certain bondholders. The statutory instrument also waives the requirement for the regulators to consult on certain rule changes related to the sale.

In addition to today’s measure, the Government will in due course lay another statutory instrument to make further changes to the ringfencing regime with regard to HSBC’s purchase of SVB UK.

[Alun Cairns (Vale of Glamorgan) (Con)]

It is a privilege to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Minister and the Treasury for the way in which they moved swiftly to facilitate the acquisition of SVB UK by HSBC.

My hon. Friend will be aware of the questionable confidence in some banks around the world. Has he made an assessment of whether he will need to come before Parliament again to propose similar adjustments to regulations for other banks that might find themselves in the same situation as SVB UK, or should we be confident that the UK banking sector in the UK is sufficiently robust?

[Andrew Griffith]

I thank my right hon. Friend for his question. Primacy for financial stability sits within the Bank of England and the Financial Policy Committee. All I can say is that the Governor of the Bank of England has confirmed that, in his view, the UK banking system remains

“safe, sound and well capitalised”.

I hope that my right hon. Friend understands that it would not be right for me to step outside those words.

Oral Answers to Questions

Debate between Andrew Griffith and Alun Cairns

Tuesday 21st March 2023 Commons Chamber

[Andrew Griffith]

Interest rates are not only falling but are still below the level at which they peaked under the last Labour Government, despite the fact that we have had a covid pandemic and war in Ukraine. I welcome the news last week from the Office for Budget Responsibility that the country is on track to avoid a recession, and we must never forget the words of the right hon. Member for Birmingham, Hodge Hill (Liam Byrne): there is no money left.

[Alun Cairns (Vale of Glamorgan) (Con)]

A competitive and viable banking sector is essential to offer competitive mortgages to constituents right across the country. What assessment has my hon. Friend made of the treatment of additional tier 1 bonds in relation to the Credit Suisse takeover, which could well undermine the sector elsewhere, and what assessment has he made of the value of those bonds here in the UK?

[Andrew Griffith]

I thank my right hon. Friend for his comments. The Government join the Bank of England in welcoming the comprehensive set of actions taken yesterday by the Swiss authorities to ensure financial stability. It would not be for me to talk from the Dispatch Box about the treatment of creditors, but the UK’s bank resolution framework has a clear statutory order in which shareholders and creditors would bear losses in a resolution or insolvency scenario.

Digital Pound

Debate between Andrew Griffith and Alun Cairns

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

The right hon. Gentleman might usefully and productively have a conversation with his own Labour Front Benchers, who only a moment ago were accusing us of moving too fast. The two points show that the financial regulators have in this particular case got the balance about right in their approach to cryptoassets. He will also know that last week we published a proposal for the regulation of cryptoassets more generally. This is not a cryptoasset; this is a digital pound. He makes a point that others have also made to me about the speed with which our financial regulators reach their conclusion. I understand that point. Whatever conclusion they reach, it would be desirable that they do so in a way that is as effective as possible and gives as much certainty as possible. It is one reason why there are powers in the Financial Services and Markets Bill, which he will know is going through the other place at the moment, that will compel the financial regulators to publish more of their operating statistics, so that he and I will be able to see how they discharge their duty to regulate in an effective manner.

[Alun Cairns (Vale of Glamorgan) (Con)]

Digital currencies in a whole range of formats are part of a fast-moving and dynamic sector of an emerging economy. To date, the regulators have struggled to keep up with the skills and capacity to bring about appropriate and effective regulation of the sector. What plans does my hon. Friend have to develop capacity within the regulators to give confidence in the marketplace that the digital pound, as well as other digital currencies, will have confidence among users?

[Andrew Griffith]

My right hon. Friend makes an important point. To govern is to choose and we ask our regulators to make choices to prioritise. It is one reason why we are looking at reform of long-standing areas, such as the 40-year-old Consumer Credit Act 1974, to see if we can modernise it and make it more fit for purpose, deliver better customer outcomes, and potentially free up the regulatory environment so they can make choices to focus on the new and emerging threats and opportunities that this domain represents.