UK to Hand Bank of England Secondary Mandate on Stablecoins and Payments Innovation

The UK Treasury has announced its intention to give the Bank of England a new responsibility to support innovation in payment systems and new forms of digital money, including stablecoins. The government will introduce amendments to the Financial Services and Markets bill to implement the change, setting up a debate in the House of Lords scheduled for September 7 and 9.

Under the plan, the innovation mandate would sit as a secondary objective for the Bank of England, positioned below its primary priority of financial stability. The central bank would also be required to submit an annual report to Parliament tracking progress toward the payments innovation objective, giving lawmakers a formal channel to monitor how the mandate is applied over time.

The move follows the Bank of England's finalisation of stablecoin rules in June, and comes as UK policymakers look to position the country's financial infrastructure for a wider shift toward digital forms of money. By writing the innovation objective directly into the Financial Services and Markets bill, the government is seeking to give the mandate statutory footing rather than leaving it as a matter of internal policy discretion at the Bank.

Who is involved

Lucy Rigby, the City Minister, is overseeing the government side of the initiative. At the Bank of England, Sarah Breeden holds the role of Deputy Governor for Financial Stability, a position that places her at the intersection of the Bank's existing stability remit and the new innovation objective it is being asked to take on.

The industry response includes comment from Maksym Sakharov, chief executive of infrastructure provider WeFi, one of the firms tracking how the UK's regulatory approach to stablecoins and tokenisation develops as the legislative amendments move through Parliament.

What happens next

The House of Lords debate on September 7 and 9 will determine whether the amendments to the Financial Services and Markets bill proceed as drafted. If adopted, the secondary objective would formally task the Bank of England with balancing its traditional stability mandate against a new statutory duty to support innovation in payments and digital money, with progress reported to Parliament on an annual basis.

For a UK financial sector already adjusting to the stablecoin rules finalised in June, the amendment would mark a further step toward embedding digital money and tokenisation considerations into the Bank of England's core statutory functions, rather than treating them as a peripheral policy interest.