UK Wants Central Bank to Support Stablecoin Innovation

England's central bank, the Bank of England, is set to prioritize the growth and development of stablecoin innovation and other digital money, according to the U.K. Treasury. The treasury has outlined that the Bank of England's regulatory framework should foster an environment conducive to the growth of tokenization and distributed ledger technology (DLT) in a safe manner.

City Minister Lucy Rigby emphasized the potential of digital payments technology, including tokenization and DLT, in transforming global financial markets. She underscored that while financial stability remains the Bank's primary objective, the secondary objective of supporting innovation in payments and digital finance will help the UK maintain its status as a global leader in financial services.

The Bank of England will now provide yearly reports to keep pace with technological advancements. The treasury further explained that the Bank of England already has a secondary objective to encourage innovation in the regulation of central counterparties and central securities depositories, which will now be extended to its regulation of payment systems, including those using digital settlement assets like stablecoins.

The crypto industry had previously criticized the Bank of England for its conservative approach towards digital assets. This move aligns with the current trend where traditional banks and asset managers are increasingly integrating blockchain technology into their operations. The Bank of England has made recent strides by issuing guidelines for stablecoins, abandoning plans for ownership limits on U.K. stablecoins, and easing the proportion of assets backing stablecoins that must be held in zero-interest accounts at the central bank.

Notably, PYMNTS reported earlier about banks and FinTechs testing blockchain technology for money movement and gaining the confidence of corporate CFOs. However, CFOs remain hesitant towards digital assets, with a recent PYMNTS Intelligence survey showing that only 13% of firms use stablecoins and 5% have adopted other cryptocurrencies.