I cannot see why there would be a desire to provide equity funding for banks on such terms rather than invest in other companies either directly or through a collective asset  2  2  To be clear, this is 20–30% of the total balance sheet not 20–30% of risk weighted assets, the latter being a considerably smaller number. BIS central bankers’ speeches  scheme. I recognise that it has been proposed that the equity funding should be built up by retaining dividends, but to accumulate say 20% of a bank’s balance sheet by this means requires I think an implausibly long transition period. In fact, based on the current position of the major UK banks, including the average dividend payment rate, the transition period to 20% equity would be around 90 years. That’s a little bit longer than the 17 year transition period for Solvency II. I do not therefore see “big equity” as a sustainable solution because this sort of proposal is just not practical. A more logical alternative to today’s approach is the narrow banking model 3. Again, to be clear, I don’t support the approach, but it has the greater logic over the “big” equity approach of creating deposit funded banks which can only hold highly liquid and low risk government bonds. Loans would be made by other financial intermediaries.
TABLE 1 THE BANK AND PRIVATE SECTOR ACCELERATORS COMPARED  Purpose  Duration of firm engagement Business model  8  Private sector  Bank of England (BoE)  accelerators  accelerator  To help ventures define and  To work with innovative firms,  build initial products and  helping them to understand  identify consumers and  the BoE’s needs, and the BoE  investors  to understand the technology  3-6 months  1-3 months  Investment in successful firms (can also be non-profit)  Non-profit, no equity taken  Selection  Competitive, in cohorts  Competitive, in cohorts  Venture Stage  Early  Generally later stages  Structured programme  PoCs structured according to  similar for all firms in the  central bank use cases and  cohort, culminating in a  success criteria. No  demo day  comparison between firms  Programme  Resourcing and Mentorship Venture location  Primary resourcing from start-up staff but with support from mentors  Start-up staff work with BoE subject matter experts  On-site  Mostly off-site  In other respects, the Bank’s Accelerator operates in a similar way to traditional accelerators (Table 1). We undertake structured Proofs of Concept (‘PoCs’), organised in cohorts to ensure appropriate resource allocation and focus. Firms are chosen through an open, competitive selection process on the basis of a well-defined central banking use case. They work closely with the Bank’s subject matter experts for a time-limited period.