UK POLICYMAKERS should start using peer-to-peer platforms to stimulate the economy, Funding Circle’s chief executive and co-founder Samir Desai said on Wednesday.
The head of the country’s third-largest business lender called on the government and the Bank of England to bypass the banking system and inject monetary stimulus via P2P platforms, capitalising on the direct access they provide to the real economy.
“It would be really exciting if the government considered this tool as a way to directly stimulate the real economy,” Desai said at the centrepiece event of Fintech Week 2017.
“The government now has a choice because of the innovation that has happened in the fintech sector: it can bypass the banking system and get money directly into the real economy when it needs to.”
“The Bank of England could also use it as a direct transmission mechanism. That’s all we are calling for and, so far, our suggestions haven’t been dismissed,” he told Peer-to-Peer Finance News on the sidelines of the Fintech Week 2017 conference.
In January, the state-backed British Business Bank channelled £40m to small- and medium-sized enterprises (SMEs) through Funding Circle, which added to the £60m it had committed to the platform in 2013.
In the last quarter of 2016 alone Funding Circle lent nearly as much to small businesses as the entire banking system combined, Desai said.
This shows that, as the P2P market gains scale and technological advantage against traditional lenders, the possibility for policymakers to use it as a preferential channel to boost the economy is not unrealistic.
“They are already buying corporate bonds – so that’s just one step behind really,” Desai said.
“Besides, it makes a lot of sense if you can stimulate 50 per cent of the country’s GDP directly.”
SMEs account for half of the country’s private sector GDP, he pointed out, and have been responsible for most of the post-credit crunch job creation across UK.