UK Treasury plans secondary mandate for Bank of England on payments innovation
UK Treasury plans secondary mandate for Bank of England on payments innovation #
The UK government said Wednesday it plans to give the Bank of England a formal obligation to support innovation in payment systems and digital money, including stablecoins.
The Treasury confirmed it will introduce a legal “secondary objective” for the BoE, sitting alongside but subordinate to the central bank’s primary mandate of preserving financial stability. The proposed change is designed to help ensure regulation does not fall behind the rapid evolution of payments technology, according to the Treasury.
To ensure accountability, the BoE would be required to report annually to Parliament on its progress against the new innovation objective. The reporting requirement is intended to keep sustained pressure on the central bank to actively advance the digital payments sector, rather than simply oversee it.
Bank of England Deputy Governor for Financial Stability Sarah Breeden welcomed the announcement, saying the central bank is already working closely with government and other authorities to maintain trust and drive innovation in UK payments, and that the secondary objective would provide further institutional backing for that work.
City Minister Lucy Rigby framed the move as central to the UK’s ambition to remain a global leader in financial services. She said developments such as tokenisation have the potential to reshape financial markets, and that the secondary objective would help ensure the BoE continues to drive innovation across payments and digital finance.
The new objective is expected to be introduced as an amendment to the Financial Services and Markets Bill, legislation due for debate in the House of Lords next month.
The announcement comes amid a broader softening of the UK’s regulatory stance on digital assets. The BoE published its planned framework for sterling-denominated systemic stablecoins in June, having already revised the original proposals after industry pushback, dropping proposed individual and corporate holding limits in favour of a £40 billion issuance cap and reducing the share of stablecoin reserves required to be held in zero-interest accounts at the central bank.
The Financial Conduct Authority has also moved to scale back planned capital requirements for stablecoin issuers, reflecting growing official concern that an overly cautious approach risks eroding London’s competitive standing. That concern has intensified as the United States has adopted a pro-crypto regulatory posture under the Trump administration. Prime Minister Andy Burnham has made maintaining London’s competitiveness in digital finance a stated government priority.
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