Treasury Plans New Innovation Mandate for the BoE The UK government is moving to formally expand the Bank of England's remit, giving it a new legal objective to support innovation in digital
The UK government is moving to formally expand the Bank of England's remit, giving it a new legal objective to support innovation in digital currencies and payment systems. According to a Financial Times report, the Treasury will introduce a legal secondary objective for the central bank that would require it to support innovation in payment systems and digital money.
The secondary objective is expected to be introduced through an amendment to the Financial Services and Markets Bill, with the legislation due to be debated in the House of Lords next month.The Treasury confirmed the innovation objective will be subordinate to the BoE's primary mandate of financial stability.Under the plan, the BoE would also be required to report annually on progress against the new objective.
Prime Minister Andy Burnham has put a priority on ensuring that London remains competitive in a rapidly evolving digital asset market.City Minister Lucy Rigby said developments in digital payments technology, including tokenization, had the potential to transform financial markets.
The shift follows criticism from some crypto businesses that the BoE has taken a cautious approach to digital assets.It also comes as the BoE and the Financial Conduct Authority step up efforts to oversee digital asset markets, with regulators increasingly focusing on the use of blockchain technology in financial services and payments.
Areas under consideration include tokenised collateral, tokenised gold and settlement models, as part of efforts to modernise financial markets. The new mandate builds on recent regulatory work already under way. The announcement follows the BoE's publication of its planned stablecoin framework in June.The BoE had previously faced pushback over proposed ownership limits for UK stablecoins, which it said were designed to protect financial stability, but that approach has since been dropped and replaced with a £40bn issuance cap.
The BoE has also been deepening its practical work on digital assets. The Bank's digital pound project entered Phase 2, testing how public stablecoins and central bank money can operate together in a single payment flow for trade finance, working with NOBO Finance, Dun and Bradstreet and Polygon Labs in its Digital Pound Lab.
Taken together, the measures signal a meaningful shift in the UK's posture toward digital finance, moving from cautious oversight to active facilitation, with the BoE now formally expected to help drive that agenda forward.
Sources:Yahoo Finance: UK to set new BoE objective to back digital currency innovationBloomberg: Bank of England Tasked With Supporting Innovation in Digital PaymentsBank of England: Policy Statement on Regulating Systemic Stablecoins
