UK Government tasks Bank of England to support payment systems innovation

Source: HM Treasury

The Government intends to give the Bank of England a new responsibility to support innovation in payment systems and emerging forms of digital money, whilst continuing to prioritise financial stability.

As digital technology continues to transform the way people and businesses make payments, the Bank’s new objective seeks to ensure the regulatory framework creates the right conditions for these innovations to develop safely and drive good growth in every postcode.

The Bank will report against this objective annually, as a means by which to track pace with technological change.

City Minister Lucy Rigby said: “Developments in digital payments technology, including tokenisation and DLT, have the potential to transform financial markets across the globe.

“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.”

Deputy Governor for Financial Stability at the Bank of England Sarah Breeden said: “We welcome today’s announcement, which will further boost our work to support innovation in financial services without compromising on financial stability.

“The Bank is doing a huge amount, together with government and other authorities, to maintain trust and drive innovation in UK payments. This new secondary objective will further support that.”

The government, working with the Bank of England and other authorities, already has an extensive programme to modernise the UK’s payments landscape, support new technologies and business models, and ensure the UK remains one of the best places in the world to develop and grow innovative financial services.

The Bank already has a secondary objective to facilitate innovation when regulating central counterparties and central securities depositories. That approach is being extended to its regulation of payment systems, including those using digital settlement assets, such as stablecoins.

This ties into the Chancellor’s commitment to create a greater confidence in investment and innovation in British businesses. Financial stability will remain the Bank’s primary objective, ensuring innovation is supported safely and responsibly.

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