UK Assigns Bank of England New Objective for Payments Innovation
The UK government is taking steps to revamp its digital asset strategy by assigning the Bank of England a new statutory secondary objective tied to payments innovation. This move aims to support London's competitiveness in stablecoins and broader digital finance while maintaining financial stability as the central bank's primary goal.
As part of this initiative, the UK Treasury will amend the Financial Services and Markets Bill to include the new objective for the Bank of England. The bill is due to be debated in the House of Lords in September. This change remains subordinate to the bank's main duty of safeguarding financial stability.
Lucy Rigby, the City minister, emphasized that developments such as tokenisation and distributed ledger technology should transform global financial markets. Regulators are increasingly trying to encourage and supervise the use of blockchain technology across financial services and payments. The Bank of England has already set out planned rules for stablecoins pegged to sterling and signalled its support for regulated UK-issued tokens.
Under the new rules, the bank will have a £40 billion issuance limit and reduced backing asset requirements to improve commercial viability for UK-issued tokens. This move is seen as an attempt to boost London's competitiveness in stablecoins and broader digital finance while keeping financial stability as the central bank's primary goal.