The announcement does not create a new stablecoin licence, nor does it remove existing safeguards. What HM Treasury is changing is the framework around the regulator itself.

Under the proposal announced on August 27, the Bank of England would gain a secondary payments innovation objective. Its existing financial-stability mandate would remain primary, so the Bank would not be required to encourage a technology when doing so would threaten systemic stability.

Why stablecoins are part of the change

The government specifically says the expanded mandate would cover systemic payment systems using digital settlement assets such as stablecoins. That makes the measure relevant well beyond conventional payment processors.

There is already a precedent inside the Bank's rulebook. The institution has a secondary innovation objective when supervising central counterparties and central securities depositories, introduced through the Financial Services and Markets Act 2023. The government now wants to extend that principle to payments.

That distinction matters. The Bank has spent years approaching new forms of digital money primarily through the lens of resilience, reserves and systemic risk. The proposed objective would add another consideration to that work: whether regulation is also leaving enough room for viable payment technologies and business models to develop.

The Bank would have to show what it is doing

The proposal also comes with an accountability mechanism. The Bank of England would report to Parliament every year on how it had advanced the innovation objective.

City Minister Lucy Rigby pointed to tokenisation and distributed-ledger technology as developments capable of reshaping financial markets. Sarah Breeden, the Bank's Deputy Governor for Financial Stability, welcomed the proposal while stressing that innovation would continue to sit alongside the institution's responsibility to maintain trust and stability.

There is an obvious tension built into that arrangement, and it is deliberate. A systemic stablecoin may be commercially useful and technically novel while still creating risks that a central bank cannot ignore. The government is not removing that judgement from the Bank.

It still needs to become law

For now, this is a government proposal rather than a completed change to the Bank's statutory responsibilities.

HM Treasury expects to implement it through amendments to the Financial Services and Markets Bill. The bill is due to return to the House of Lords for debate on September 7 and September 9.

Britain is already working on a broader overhaul of payments infrastructure that includes tokenised payments, stablecoins and other forms of digital settlement. The August 27 announcement would put support for that innovation directly into the regulatory mandate governing one of the institutions responsible for keeping those systems safe.