UK Bill Gives Bank of England Stablecoin Innovation Mandate

The UK government plans to hand the Bank of England a secondary objective to support innovation in payments, including stablecoins and other digital settlement assets. Financial stability will remain the central bank’s primary duty under the proposed change.

The move comes through the Financial Services and Markets Bill, which is set for debate in the House of Lords on September 7 and September 9. If passed, the new mandate would require the BoE to consider how its rules affect stablecoin issuers, tokenised payment networks, and blockchain-based settlement tools.

City Minister Lucy Rigby said tokenisation and distributed ledger technology could reshape financial markets globally. “Whilst financial stability will always remain the Bank’s primary objective, this secondary objective will support the Bank to continue to drive innovation in payments and digital finance,” Rigby said.

The BoE already has a secondary innovation objective for its oversight of central counterparties and central securities depositories. The government is now applying the same framework to systemic payment systems, placing stablecoins and tokenised settlement in the same policy space as traditional payment infrastructure.

Deputy Governor for Financial Stability Sarah Breeden said the Bank welcomed the proposal. It would help the BoE support innovation in financial services without abandoning financial stability, she said. Under the plan, the BoE must report annually to Parliament on its progress against the new objective, with a formal measurement system to track results.

The UK push parallels efforts in other jurisdictions. Regulators in the US are also rethinking oversight of tokenised deposits and stablecoins, as explored in our coverage of how banks and exchanges are approaching the shift through the structure of tokenized offerings, including the role of stablecoins in settling tokenised securities.