Ministers plan to introduce a new secondary objective for the Bank of England, tasking it with supporting innovation in payment systems and emerging forms of digital money. This move is intended to ensure the UK's payments regulation adapts to technological advancements and fosters innovation.
City Minister Lucy Rigby stated that developments in digital payments technology, such as tokenisation and Distributed Ledger Technology (DLT), have the potential to transform financial markets globally. She added that while financial stability remains the Bank's primary objective, this secondary objective will help the Bank drive innovation in payments and digital finance, aiming to maintain the UK's position as a leader in financial services.
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, welcomed the announcement, noting it would further support the Bank's work in financial services innovation without compromising stability. The Bank already has a secondary objective to facilitate innovation in regulating central counterparties and central securities depositories, and this approach will now extend to its regulation of payment systems, including those using digital settlement assets like stablecoins.