The government will give the Bank of England a new secondary objective to support innovation in payment systems and digital money, and the payments specialists who commented broadly welcomed it while pressing on how the intent is turned into rules.
HM Treasury said on 27 August that it intends to give the Bank a formal responsibility to support innovation in payment systems and emerging forms of digital money, including stablecoins. The duty sits below the Bank’s primary objective of protecting financial stability, and the Treasury was explicit that it will not require the Bank to support innovation where doing so would undermine stability. City Minister Lucy Rigby said tokenisation and distributed ledger technology had the potential to transform financial markets, while the
Bank’s Deputy Governor for Financial Stability, Sarah Breeden, said the change would further support work already under way to maintain trust and drive innovation in UK payments.
The step is less of a departure than it first appears. The Bank has held a secondary innovation objective for central counterparties and central securities depositories since the Financial Services and Markets Act 2023, and this reform extends the same approach to systemic payment systems, including those that settle in digital assets. The government expects to make the change through amendments to the Financial Services and Markets Bill rather than through fresh primary legislation.
For firms building on sterling rails, the value is in the signal. Mark Fairless, CEO of ClearBank, said the announcement showed “the Government’s desire for the UK to be at the forefront of the digital assets revolution”, and that it was “encouraging to see the Bank of England given a clear mandate to support the development of sterling denominated stablecoins, while continuing to prioritise the financial stability and trust that underpin its role”. London’s ability to combine regulation and innovation, he added, had made it a global financial hub, and the objective was “a step towards applying the same principles to maintain
its position for the future”.
Melissa Di Donato, CEO and chair of Kyriba, set the move against the UK’s recent caution. “The UK has historically set a more cautious bar than the EU and US on stablecoins, but this announcement is a step in the right direction and supports demand from UK businesses,” she said. “Until now, the missing piece has been a solid regulatory foundation, and, moving forward, getting the balance right between financial stability and innovation represents a significant opportunity for UK competitiveness and growth.”
Iana Dimitrova, CEO of the financial infrastructure provider OpenPayd, welcomed the mandate but said it would be judged on the detail. “Giving the Bank of England a formal secondary objective to support innovation is a meaningful step,” she said, describing stablecoins as increasingly used to move money rather than to hold value. Her caveat was commercial: “Reserve income is an important part of the economics for stablecoin issuers, and requirements that place significant reserves in unremunerated central bank deposits
directly affect the commercial viability of any frameworks.” The priority now, she said, was making sure regulatory clarity and commercial viability moved together, with closer dialogue between UK, EU and US regulators.
Jeremy Verba, CEO of CoinCover, argued that the harder work is in the infrastructure behind the headline. “This is a welcome and overdue signal that the UK wants to lead on digital assets rather than simply regulate them from the sidelines,” he said, “but innovation and competitiveness on a global scale will only be built on trust, and trust cannot exist without the right infrastructure behind it.” As stablecoins and digital money move into the mainstream, he said, holders need confidence that access will not be lost “through a mismanaged key, a departed employee or a technical failure”, and recovery and continuity should be built in from the start.
The Financial Services and Markets Bill is next due to be debated in the House of Lords on 7 and 9 September. Once the objective is in force, the Bank will report to Parliament each year on how it is advancing it.
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