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The UK government plans to give the Bank of England a new secondary objective to support innovation in payment systems and digital forms of money, including stablecoins. The Treasury said the change is intended to help regulation keep pace with developments in payments technology while keeping financial stability as the Bank’s primary responsibility.
The proposal would expand the Bank’s existing innovation responsibilities. The central bank already has a secondary innovation objective for certain financial market infrastructure functions involving central counterparties and central securities depositories.
New Objective Would Cover Payments Innovation
Under the planned change, the Bank would have to consider innovation when carrying out relevant payment-system responsibilities. The Treasury also said the Bank would report annually to Parliament on how it is advancing the new objective.
City Minister Lucy Rigby said financial stability would remain the Bank’s primary objective. She stated:
“The secondary objective would support the Bank to continue to drive innovation in payments and digital finance.”
Stablecoins Form Part of UK Payments Plans
The proposal comes as the UK develops its regulatory framework for stablecoins and other forms of tokenized money. In June, the Bank published draft rules for systemic sterling stablecoins that included a £40 billion issuance guardrail for each systemic stablecoin, alongside changes to its earlier approach to holding limits.
The Bank intends to finalize its systemic stablecoin rules by the end of 2026, with regulated stablecoins expected to operate under the framework from 2027. The government is separately developing changes to payment-services regulation covering areas including stablecoins and tokenized deposits.
UK Continues Digital Money Policy Push
The government has also said it wants well-regulated stablecoins, tokenized deposits and similar instruments to coexist within the financial system. A July UK-U.S. statement called stablecoins an important form of digital-money innovation and supported their use in payments, settlement and cross-border finance.
The new Bank of England objective would add innovation more explicitly to the central bank’s responsibilities for payments while leaving its financial-stability mandate in place. How that objective affects individual regulatory decisions will depend on the final legislation and its implementation.
