The UK executive authorities have announced an expansion of the functional powers of the national central bank. The regulator is set to take on additional responsibility for promoting technological progress in payment infrastructure and new forms of digital settlement instruments, including stablecoins. The updated role is planned as a secondary priority relative to the core objective of ensuring financial system stability, meaning any new initiatives must not pose threats to overall stability. To monitor compliance with the new obligations, the central bank will submit a detailed annual report to parliament on the results achieved.
City Minister Lucy Rigby highlighted the transformational potential of digital settlement technologies, including distributed ledgers and asset tokenization. In her assessment, the expansion of regulatory powers will allow the United Kingdom to maintain a competitive position in the global financial services market. Bank of England Deputy Governor for Financial Stability Sarah Breeden endorsed the proposed changes, noting that they will strengthen the work of accompanying technological innovations while preserving the economy's protective mechanisms.
A similar secondary mandate mechanism has previously been applied by UK authorities in the oversight of central counterparties and depository institutions. This approach is now planned to be extended to systemically important payment infrastructures, including those using digital settlement assets. The corresponding adjustments are expected to be introduced through amendments to the Financial Services and Markets Bill, the discussion of which in the House of Lords is scheduled for September 7 and 9 of this year.
The initiative continues the UK authorities' consistent effort to build a comprehensive regulatory framework for digital financial instruments. In April, the Treasury presented a strategic document on reforming the payments sector, providing for the unification of regulation of traditional services, stablecoins, and tokenized deposits within a single legal framework. This approach reflects the ambition to create a predictable environment for the development of financial technologies while maintaining high standards of consumer protection and systemic stability.