HM Treasury plans to introduce an amendment to the Financial Services and Markets Bill, establishing a statutory ‘secondary objective’ for the Bank of England focused on fostering innovation in payments and digital money. This new objective will operate under the Bank’s primary responsibility for financial stability and is expected to be presented to the House of Lords in September.
The Bank of England will be required to report annually to parliament on its progress in fulfilling this objective. The stated aim is to support the Bank in driving innovation in payments and digital finance, thereby ensuring the UK remains a global leader in financial services.
The move comes amid mounting global competition in the stablecoin market. Approximately 99% of stablecoins currently in circulation are dollar-denominated. In response to this landscape, the Bank of England has previously adjusted its regulatory approach. Planned caps on stablecoin ownership were dropped in favour of a £40 billion issuance limit. Furthermore, the Bank reduced the proportion of backing assets issuers must hold in zero-interest deposits, a move interpreted as an effort to enhance the commercial viability of UK-issued stablecoins against those in rival jurisdictions.
Applications for systemic sterling stablecoin issuers are expected to open by the end of the year. This aligns with a broader international trend of regulatory framework development for digital assets. The European Union’s Markets in Crypto-Assets (MiCA) regime has applied to stablecoin issuers since June 2024, with its full framework coming into force in December 2024. The United States introduced the GENIUS Act last year.
While the new objective is designed to encourage innovation, the Bank of England’s governor has previously flagged a potential future divergence with Washington regarding the supervision of stablecoins. Specific details concerning the Bank of England’s annual reporting mechanism and the precise nature of any future regulatory discussions with the US remain subjects of uncertainty.
The Bank of England’s primary mandate remains financial stability. The new secondary objective is designed to operate within this existing framework, guiding its efforts in the evolving digital payments and finance sector.
Why This Matters
The materials describe a narrow update: HM Treasury will introduce an amendment to the Financial Services and Markets Bill to create a statutory ‘secondary objective’ for the Bank of England. The specific details of the Bank of England’s annual reporting on progress.
Broader Context
Source materials place the factual news in this context: The move comes amid mounting global competition on stablecoins.
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