UK to give Bank of England a new objective on digital currency innovation

Bank of England Gets a New Digital Finance Mandate

The UK Treasury (@hmtreasury) announced on Wednesday that the Bank of England will be handed a new secondary objective: to support innovation in payment systems and digital money, including stablecoins. The proposed objective would sit alongside financial stability, which remains the central bank's primary responsibility. Under the plan, the Bank would be required to report annually to Parliament on how it is advancing the innovation objective.

The move signals a shift in tone for the UK's approach to digital finance. The Treasury has faced criticism that the Bank of England has been too cautious on new payments technology, and the new mandate is designed to address that. The proposed objective is intended to help ensure that regulation keeps pace with changes in payments technology. Bank of England Deputy Governor Sarah Breeden welcomed the announcement.

City Minister Lucy Rigby said developments in digital payments technology, including tokenization, had the potential to transform financial markets. Prime Minister Andy Burnham has made London's competitiveness in digital assets a policy priority, and the new objective reflects that agenda. Britain's government under Prime Minister Andy Burnham plans to maintain its predecessor's pro-growth approach to financial services regulation.

FCA Also Eases Stablecoin Capital Rules

The Bank of England mandate is part of a broader regulatory push across UK financial institutions. The UK's Financial Conduct Authority finalized its long-awaited cryptoasset regulatory framework on June 29 to 30, 2026, marking the most sweeping overhaul of UK digital asset oversight to date. The FCA said it will cut stablecoin issuers' capital requirement to 1% of the total value of their stablecoins in circulation, down from the previously proposed 2%. The reduction came after significant industry pushback on the earlier proposal.

The revised requirement puts the UK's capital buffer at exactly half of what the EU demands under its Markets in Crypto-Assets (MiCA) regulation. Authorization for firms wanting to issue qualifying stablecoins opens on September 30, 2026, with broader implementation rolling out gradually through 2027.

Together, the Treasury's mandate for the Bank of England and the FCA's lighter-touch stablecoin rules represent a coordinated effort to position the UK as a competitive destination for digital asset businesses, without compromising on core financial stability oversight.

Sources:
Reuters via AOL: Britain plans new Bank of England objective to support payments innovation
CoinDesk: UK's FCA lowers stablecoin capital buffers to 1%, undercutting the EU's MiCA
Bank of England: Digital pound news