The UK Treasury said Wednesday it will assign the Bank of England a new secondary objective to support innovation in payments and digital money, while keeping financial stability as the central bank's primary mission. The Bank will report annually to Parliament on its progress.
The move grants statutory weight to an area where the central bank has faced criticism for moving cautiously on emerging technologies. Prime Minister Keir Starmer's government has made London's competitiveness in digital assets a policy priority, with the Treasury framing the objective as a way to position the UK alongside other major economies exploring payments infrastructure modernization.
The objective covers digital money and stablecoin innovation alongside broader payments systems. It does not establish a mandate to develop a central bank digital currency, nor does it override the Bank's core financial stability remit. The Treasury framed the secondary objective as complementary to existing responsibilities rather than a new primary focus.
In June, the Financial Conduct Authority cut planned stablecoin capital requirements after industry consultation. The regulatory environment has shifted toward less restrictive guardrails.
Annual reporting to Parliament will create a formal accountability mechanism for the Bank's work in the space. The reports will document projects, regulatory assessments, and policy recommendations tied to the new objective. This structure mirrors how the Treasury structures other secondary objectives for the central bank, including financial inclusion and climate risk.
The Bank of England has already begun work on payments modernization through its Real Time Gross Settlement system upgrade and separate research into potential digital pound architecture. Those existing programs will now formally fall under the new secondary objective rather than sit as discretionary initiatives. Whether the statutory framing accelerates timelines or shifts resource allocation within the Bank remains to be tested through the first parliamentary report.
The next watch is whether the Bank's first annual report to Parliament, expected in late 2027, names specific milestones or timelines for stablecoin regulation or digital money infrastructure, or if it maintains the cautious language that characterized its prior public statements on the sector.
