UK Bank Mandate Shifts Focus to Digital Payments Innovation

The UK Government has given the Bank of England a new mandate to support innovation in digital payments and stablecoins. This secondary objective, proposed by HM Treasury, will sit alongside the bank's primary financial stability remit.

The move follows a significant policy reversal by the Bank of England, which had initially proposed strict caps on stablecoin holdings and heavy capital requirements. The initial plans drew widespread industry criticism for stifling innovation, prompting the Bank to scrap its low cap and relax its backing asset rules.

Under the new framework, the Bank will be required to report annually to parliament on its progress against the innovation objective. City Minister Lucy Rigby said developments like tokenisation have the potential to transform financial markets.