- New Bank of England objective will help ensure UK payments
regulation keeps pace with technological change and create
conditions for innovation.
- Secondary payments innovation objective will sit below Bank's
primary financial stability objective and is part of reforms to
boost UK's leading financial services sector.
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 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.
More information
- The Bank of England supervises critical financial market
infrastructure, including systemic payment systems, central
counterparties (CCPs) and central securities depositories (CSDs).
- The Bank's has a primary objective to protect and enhance UK
financial stability. The new secondary innovation objective will
be subordinate to this and will not require the Bank to support
innovation where doing so would undermine financial stability.
- The Bank already has a secondary innovation objective for
CCPs and CSDs, introduced through the Financial Services and
Markets Act 2023. This reform will extend the same approach to
systemic payment systems, including those using digital
settlement assets.
- The Bank will report annually to Parliament on how it was
advancing the innovation objective.
- The government expects to implement this change through
making amendments to the Financial Services and Markets Bill,
which will be next debated in the House of Lords on 7 and 9
September.
