The UK Treasury announced Wednesday that it will grant the Bank of England a secondary statutory objective focused on supporting innovation in payments and digital money. The measure is designed to signal that ministers want the central bank to move more swiftly regarding stablecoins.
The new duty will be introduced via an amendment to the Financial Services and Markets Bill, which is scheduled to reach the House of Lords in September. Under the amendment, the Bank of England will be required to report annually to parliament on its progress in advancing the objective.
City Minister Lucy Rigby noted in a statement that while financial stability remains the primary responsibility of the central bank, the secondary objective will help drive innovation in payments and digital finance to keep the UK competitive globally. Rigby added that distributed ledger technology and tokenization have the potential to transform financial markets.
The legal duty follows criticism from crypto firms that have previously accused the central bank of maintaining an overly conservative approach to digital assets. Ahead of this change, the Bank adjusted its rules for sterling-pegged tokens in June by replacing planned holding caps with a £40 billion issuance limit and reducing the share of backing assets required to be held in zero-interest central bank deposits.
Sarah Breeden, the Bank's deputy governor for financial stability, welcomed the new objective. Meanwhile, Sasha Mills, the Bank's executive director for financial market infrastructure, stated in May that systemic sterling stablecoins must be treated as a new and robust form of money. Applications from prospective issuers of systemic sterling stablecoins are expected to open by the end of the year.
The policy shift arrives amid growing international competition, including the European Union's MiCA regulatory framework and the United States' GENIUS Act. Mills pointed out in May that dollar-denominated assets account for roughly 99% of stablecoins in circulation, leaving sterling-backed tokens with a small fraction of the market that the Bank is now looking to expand.
