The UK government has announced that it intends to give the Bank of England a new secondary objective to support innovation in payment systems and emerging forms of digital money, while continuing to prioritise financial stability.
The proposed objective is intended to help make sure that the regulatory framework keeps pace with technological change and creates the conditions for payments innovation to develop safely. The Bank will be required to report annually on its progress against the objective.
The change sits alongside the government's wider programme to modernise the UK payments landscape, support new technologies and business models, and maintain the UK as an attractive jurisdiction for innovative financial services.
The Bank supervises critical financial market infrastructure, including systemic payment systems, central counterparties (CCPs) and central securities depositories (CSDs).
It already has a secondary innovation objective when regulating CCPs and CSDs, introduced by the Financial Services and Markets Act 2023. The proposed reform would extend a similar approach to the Bank's regulation of systemic payment systems, including those using digital settlement assets such as stablecoins.
The government expects to implement the change through amendments to the Financial Services and Markets Bill, which is due to be debated in the House of Lords in September.
This development indicates that UK policymakers are seeking to balance innovation and competitiveness with the Bank's core financial stability mandate.
