UK to Give Bank of England New Mandate for Payments Innovation
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Britain Unveils New Bank of England Objective for Payments Innovation and Stablecoins
Government Plans and Regulatory Developments in Digital Payments
Introduction to the New Objective
Aug 26 (Reuters) – The British government plans to give the Bank of England a new “secondary objective” to support innovation in payment systems and digital money such as stablecoins, while maintaining financial stability as the central bank’s primary responsibility, the Treasury said on Wednesday.
Understanding Stablecoins
Definition and Usage
Stablecoins are crypto tokens designed to hold a steady value and are predominantly used in crypto trading as well as, increasingly, in payments. They have grown rapidly in recent years, particularly under the crypto-friendly policies drawn up by the Trump administration.
Regulatory Objectives and Responses
Keeping Pace with Technology
• The proposed objective is intended to help ensure that regulation keeps pace with changes in payments technology, according to the Treasury.
Bank of England’s Reaction
• Bank of England Deputy Governor Sarah Breeden welcomed the announcement.
Financial Regulator’s Adjustments
• Britain’s financial regulator said in June that it would reduce its planned capital requirements for stablecoin issuers after industry pushback, as it unveiled regulations to bring the cryptoasset sector fully within its remit for the first time.
Government Policy and Oversight
Pro-Growth Approach
• Britain’s new government under Prime Minister Andy Burnham plans to maintain its predecessor’s pro-growth approach to financial services regulation, Reuters has reported, with new Finance Minister John Healey retaining several Treasury ministers from the previous administration.
Parliamentary Reporting
• The bank would be required to report annually to parliament on how it is advancing the innovation objective, the Treasury said.
Industry and Ministerial Perspectives
Potential of Digital Payments Technology
• City Minister Lucy Rigby said developments in digital payments technology, including tokenization, had the potential to transform financial markets.
Statement from City Minister Lucy Rigby
Maintaining Financial Stability and Driving Innovation
• “Whilst financial stability will always remain the Bank’s primary objective, this secondary objective will support the Bank to continue to drive innovation in payments and digital finance, ensuring that the UK remains a global leader in financial services,” Rigby said in the statement.
Reporting Credits
(Reporting by Natalia Bueno Rebolledo and Mrinmay Dey in Mexico City; Editing by Mark Porter)
