UK Grants BoE Stablecoin Mandate with £40 Billion Issuance Cap

The Bank of England is set to receive a mandate from the UK government to support innovation in stablecoins, with a temporary £40 billion issuance cap for systemic stablecoins. The new framework will aim to strengthen the country's position in the digital finance sector.

According to the UK Treasury, the amendment to the Financial Services and Markets Bill will grant the Bank of England the authority to support stablecoin and digital currency innovation alongside maintaining financial stability. This mandate will require the central bank to report annually on its progress in supporting innovation in payment systems and digital currencies.

The £40 billion issuance cap for each systemic stablecoin will be applied individually, rather than to the total market value of all stablecoins. Issuers may be allowed to hold up to 70% of their reserves in short-term UK government debt, with the remainder kept in central bank deposits.