Bank of England Gets New Objective to Support Digital Payment Innovation

The Bank of England is set to receive a new secondary objective aimed at supporting innovation in payment systems and emerging forms of digital money. This move comes as part of the UK government's efforts to modernize the country's payments landscape, promote new technologies, and maintain its status as an attractive jurisdiction for innovative financial services.

The proposed objective will require the Bank to prioritize financial stability while also encouraging innovation in payment systems. The regulator will need to report annually on its progress against this goal. This development is seen as a step towards balancing the Bank's core mandate of maintaining financial stability with the need to adapt to technological advancements.

The change builds on existing regulations, which already include a secondary innovation objective when regulating central counterparties (CCPs) and central securities depositories (CSDs). The proposed reform would extend this approach to the Bank's regulation of systemic payment systems, including those that use digital settlement assets such as stablecoins.

The UK government expects to implement the change through amendments to the Financial Services and Markets Bill, which is due for debate in the House of Lords in September. This development indicates a willingness by policymakers to balance innovation and competitiveness with financial stability.