HM Treasury has announced plans to give the Bank of England a new secondary objective to support innovation in payment systems.
HM Treasury and City Minister Lucy Rigby have confirmed plans to introduce a new secondary objective for the Bank of England, requiring the central bank to support innovation in payment systems and emerging forms of digital money, while maintaining financial stability as its primary mandate.
The Bank of England already holds a secondary objective to facilitate innovation in its regulation of central counterparties (CCPs) and central securities depositories (CSDs), introduced through the Financial Services and Markets Act 2023. In addition, under the proposed changes, this approach will be extended to the Bank's regulation of systemic payment systems, including those that use digital settlement assets such as stablecoins.
The government said the new objective is intended to help UK payments regulation keep pace with technological developments, including tokenisation and distributed ledger technology (DLT), while ensuring the regulatory framework does not compromise financial stability. Financial stability will remain the Bank's primary objective, and the innovation objective will sit below it; the Bank will not be required to support innovation where doing so would undermine stability.
Reporting and next steps
Under the proposal, the Bank of England will report annually to Parliament on how it has advanced the innovation objective. The government expects to implement the change through amendments to the Financial Services and Markets Bill, which is scheduled to be debated in the House of Lords on 7 and 9 September 2026.
The reform forms part of a wider programme by the government, working alongside the Bank of England and other authorities, to modernise the UK's payments landscape and support new technologies and business models in financial services.
City Minister Lucy Rigby said developments in digital payments technology, including tokenisation and DLT, have the potential to transform financial markets globally, and that the secondary objective will support the Bank in continuing to develop innovation in payments and digital finance.
Deputy Governor for Financial Stability at the Bank of England, Sarah Breeden, said the announcement will support the Bank's work on innovation in financial services without compromising financial stability, adding that the Bank is working with government and other authorities to maintain trust and support innovation in UK payments.
The change is linked to the Chancellor's stated aim of increasing confidence in investment and innovation among UK businesses. The Bank of England currently supervises critical financial market infrastructure, including systemic payment systems, CCPs, and CSDs.
