Bank of England Welcomes Government Plan to Drive UK Payments Innovation

The British Treasury plans to give the Bank of England a new “secondary objective” to support innovation in payments technology and digital currencies, including stablecoins, Reuters reported Wednesday (Aug. 26).

The proposed objective aims to ensure that regulation keeps up with changes in technology, and it would require the bank to report annually to parliament on its progress, according to the report.

City Minister Lucy Rigby said in the report: “Whilst financial stability will always remain the Bank’s primary objective, this secondary objective will support the Bank to continue to drive innovation in payments and digital finance, ensuring that the UK remains a global leader in financial services.”

While the U.K. has a new government under Prime Minister Andy Burnham, the previous government’s “pro-growth approach” to financial services regulation is continuing, the report said.

The Financial Times reported Wednesday that the new objective signals that ministers want the Bank of England to do more to promote the U.K. as a hub for digital assets.

The Bank of England has been criticized by crypto companies that say it has taken too conservative an approach to digital assets, and the new objective is likely to be welcomed by financial services executives at a time when traditional banks and asset managers are exploring the use of blockchain technology, according to the report.

The Bank of England aims to encourage the growth of regulated stablecoins pegged to the pound. In recent months, it has laid out planned stablecoin rules, eliminated plans for ownership limits on U.K. stablecoins after crypto executives said that would hamper growth, and lowered the proportion of assets backing stablecoins that must be held in zero-interest accounts at the central bank, the report said.

The new statutory objective will be included in a Financial Services and Markets Bill that is set to be debated in the House of Lords in September, per the report.

Sarah Breeden, deputy governor for financial stability at the Bank of England, said in the report: “The bank is doing a huge amount, together with government and other authorities, to maintain trust and drive innovation in UK payments. This new secondary objective will further support that.”