UK Plans to Add Stablecoin Innovation to Bank of England’s Official Mandate

The UK government plans to give the Bank of England a new secondary objective focused on supporting innovation in payments and digital money, including stablecoins, while maintaining financial stability as the central bank’s primary responsibility.

The proposed change comes amid criticism that the Bank of England has taken a restrictive approach to stablecoins and risks leaving the UK behind other major jurisdictions. The development was highlighted in information shared on X by @coinbureau.

The global stablecoin market is now valued at around $310 billion, according to the post, yet less than 0.5% of the market is denominated in British pounds. The UK government’s proposed mandate change is intended to encourage greater development of digital payment technologies while keeping financial stability at the center of the Bank’s responsibilities.

Bank of England Could Receive New Payments Innovation Objective

Under the proposed framework, the Bank of England would receive a secondary objective to support innovation in payments and digital money.

Financial stability would remain the Bank’s primary responsibility. The additional objective would therefore sit alongside, rather than replace, its existing focus on maintaining stability across the financial system.

The proposed change reflects the growing importance of digital money and stablecoins within the global payments industry. Stablecoins are digital assets generally designed to maintain a stable value relative to an underlying currency or other reference asset and have become increasingly important in cryptocurrency markets and digital payments.

For the UK, the relatively limited use of sterling-denominated stablecoins has become a notable issue. According to the information shared by @coinbureau, less than 0.5% of the global stablecoin market is denominated in British pounds, despite the overall market having reached around $310 billion.

UK Faces Criticism Over Stablecoin Regulation

The proposed mandate follows criticism of the Bank of England's approach to stablecoins.

A UK parliamentary committee previously warned that Britain was “lagging behind” the United States and European Union in the development of its digital asset and stablecoin framework. The criticism has added pressure on policymakers to create conditions that allow innovation while preserving safeguards for financial stability.

The UK has been working to establish a regulatory framework for digital assets as governments around the world respond to the expanding role of stablecoins in payments and financial markets.

The proposed secondary objective would give the Bank a formal responsibility to consider payments innovation as part of its policy work. At the same time, the Bank would retain its primary responsibility for financial stability, maintaining a distinction between encouraging technological development and managing financial risks.

Bank Drops Individual Stablecoin Holding Limits

The Bank of England has already changed elements of its proposed approach to stablecoin regulation.

According to the information provided, the Bank scrapped proposed individual holding limits for stablecoins. Instead, it introduced a temporary £40 billion issuance cap for each systemic stablecoin.

Financial the distinction is significant because an individual holding restriction would directly limit the amount of a stablecoin that a person could possess. An issuance cap, by contrast, focuses on the total amount of a systemic stablecoin that can be issued.

The temporary £40 billion cap would apply to each systemic stablecoin under the proposed framework. The approach reflects an effort to manage potential risks associated with large-scale stablecoin adoption while allowing the sector to continue developing.

Bank of England to Report Annually to Parliament

The proposed framework would also introduce an additional reporting requirement for the Bank of England.

The Bank would be required to report to Parliament each year on how it is advancing innovation in payments.

The annual reporting requirement would provide Parliament with a mechanism to assess the Bank’s progress in supporting developments in digital money and payment systems. It would also create a formal connection between the Bank’s new secondary objective and its accountability to lawmakers.

The broader policy shift comes as stablecoins continue to expand internationally. With the global market now around $310 billion, policymakers are increasingly considering how digital currencies can fit within existing financial and payment systems.

For the UK, the proposed changes represent an effort to balance innovation with financial stability. The government’s plan would give the Bank of England an explicit role in promoting payments innovation while preserving its primary responsibility for protecting the stability of the financial system.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.