The Bank of England is set to receive a new legal mandate aimed at accelerating innovation in payment systems and digital money. The UK Treasury confirmed on Wednesday that it will create a statutory secondary objective for the central bank, ensuring support for technological progress in these areas while maintaining financial stability as its primary responsibility.
New Objective Added to Financial Services Bill
The forthcoming duty will arrive via an amendment to the Financial Services and Markets Bill, which is scheduled for discussion in the House of Lords next month. Under the proposal, the Bank of England will be required to provide an annual report to parliament detailing its advancements toward this new objective.
The move underscores the government’s intent to keep the UK at the forefront of global financial innovation. Treasury officials described the initiative as a response to both ongoing technological developments and calls from industry participants for greater flexibility in digital assets regulation.
City Minister Lucy Rigby stated that, while financial stability remains the Bank’s key focus, the secondary objective would help maintain the UK’s leadership in financial services. Rigby noted that tokenization and distributed ledger technology could substantially reshape traditional financial markets.
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AAPLCity Minister Lucy Rigby said this additional objective would enable the Bank to continue driving innovation in payments and digital finance, supporting its role in making the UK a global financial services leader. She emphasized the potential for tokenization and distributed ledger technology to transform financial markets.
Policy Response to Industry Criticism
This policy update follows sustained criticism from digital asset firms, which have pointed to what they perceive as the Bank of England’s overly cautious stance towards the adoption and regulation of stablecoins. Over recent months, industry pressure prompted the Bank to adjust its approach, including removing proposed caps on individual stablecoin holdings and instead introducing a £40 billion issuance limit.
The Bank also lowered requirements for the proportion of backing assets issuers must hold in non-interest-bearing central bank deposits. This adjustment is intended to make UK-issued stablecoins more commercially competitive with those from other jurisdictions, enhancing their viability in the rapidly evolving market.
Sarah Breeden, the Bank’s deputy governor for financial stability, welcomed the government’s decision, calling the new secondary objective an additional tool to promote trust and innovation in UK payments.
Sarah Breeden highlighted the collaborative work between the Bank, government, and regulatory agencies to sustain public confidence and foster innovation in the nation’s payment systems, adding that the secondary objective offers further support for these efforts.
Stablecoins Seen as ‘New Form of Money’
As the Bank of England prepares to accept applications from prospective stablecoin issuers, executive director for financial market infrastructure Sasha Mills described stablecoins as “a new form of money” that must be held to the same rigorous standards as traditional currency. Mills indicated that applications to issue systemic sterling-pegged stablecoins in the UK will open before year-end.
This shift occurs against the backdrop of intensifying international competition. The European Union’s Markets in Crypto-Assets (MiCA) regulations for stablecoins began applying to issuers in June 2024, with the entire framework taking effect in December. In the United States, the GENIUS Act was introduced last year to address stablecoin oversight.
Currently, 99% of circulating stablecoins are pegged to the US dollar, with sterling tokens representing a small fraction of the market. The Bank of England’s governor has signaled that regulatory authority over these assets is likely to become a key area of discussion with US counterparts.
With growing demands for real-time, transparent financial infrastructure, the broader market is witnessing a transformation in its approach to real-world assets. Traditionally reliant on complex broker systems, institutional investors and Wall Street players are increasingly turning to Web3 platforms. Emerging platforms like 1stepSwap enable users to directly hold tokenized shares of major US companies, gold, and silver in their crypto wallets, automatically securing the best prices and eliminating traditional intermediaries.
