The UK government announced on Aug. 27 that it plans to give the Bank of England a new statutory objective to support innovation in payment systems, stablecoins and other forms of digital money. The proposal would expand the central bank’s existing remit while making clear that financial stability will remain the Bank’s primary duty.
Under the proposed framework, the Bank would support innovation in modern payment technologies and systemic payment systems, including those using digital settlement assets such as stablecoins. It would not be required to support an innovation when doing so could undermine financial stability. City Minister Lucy Rigby said tokenization and distributed ledger technology “have the potential to transform financial markets,” while Bank of England Deputy Governor Sarah Breeden said the objective would support innovation “without compromising on financial stability.”
The Bank would report annually to Parliament on its progress under the objective. Lawmakers are expected to debate amendments when the Financial Services and Markets Bill returns to the House of Lords on Sept. 7 and 9. The final statutory wording will determine which payment systems fall within the objective and how the annual reporting requirement operates.
The announcement follows the Bank of England’s June policy statement on sterling-denominated systemic stablecoins. The Bank removed planned temporary limits of £20,000 for individuals and £10 million for most businesses, replacing them with an initial £40 billion issuance limit for each systemic stablecoin. Issuers may hold up to 70% of backing reserves in short-term British government debt, with the remaining 30% generally held as non-interest-bearing deposits at the central bank.
Britain’s wider crypto regime is also advancing. The Financial Conduct Authority finalized its main crypto rules on June 30, covering financial resilience, market integrity, stablecoin reserves, redemption and consumer standards. Crypto firms can apply for authorization from Sept. 30, 2026, through Feb. 28, 2027, before the mandatory regime begins on Oct. 25, 2027.
The proposed Bank of England objective is also seen as a competitive response to U.S. stablecoin regulation, including the U.S. GENIUS Act framework from 2025. The move reflects the UK’s aim to strengthen its position as a global hub for digital finance, while U.S. and British officials have discussed one-to-one reserves and closer cross-border coordination, though no binding shared rules were created.
